On February 12, 2024, the Insolvency and Bankruptcy Board of India (“IBBI”) notified the following regulations to further amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
Regulation 2B Amendment: The liquidator is now required to file the proposal of compromise or arrangement only if recommended by the committee under regulation 39BA of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and within thirty days from the liquidation commencement date.
Regulation 14 Amendment: The liquidator must consult the consultation committee before applying to the Adjudicating Authority for early dissolution and provide a detailed report incorporating the views of the consultation committee.
Regulation 31A Amendment: Various amendments have been made regarding the review of marketing strategy, continuation of legal proceedings, extension of payment of balance sale consideration, convening subsequent meetings, and presenting economic rationale and progress in each meeting.
Regulation 32A Amendment: Amendments clarify that the sale of the corporate debtor cannot be the only option for bidders after the first auction, and running the corporate debtor as a going concern requires consultation with the consultation committee.
Regulation 33 Amendment: Private sale can only occur after prior consultation with the consultation committee, and certain clauses regarding immediate action and omission of clause (c) have been amended.
Regulation 35 Amendment: The liquidator’s opinion regarding valuation now requires consultation with the consultation committee, and new sub-regulations have been added regarding valuation methodology, confidentiality of valuation reports, and explanations for deviations.
Regulation 46 Amendment: Sub-regulations regarding withdrawal of amount deposited into the Corporate Liquidation Account and exclusion of certain assets from the liquidation estate have been substituted or inserted.
Schedule I Amendment: Amendments include provisions regarding the auction notice, reserve price reduction, balance sale consideration, and confirmation of private sale after consultation with the consultation committee.
These amendments mark a significant step towards enhancing the efficiency, transparency, and fairness of the liquidation process under the Insolvency and Bankruptcy Code, 2016. By introducing clearer guidelines and procedures, facilitating consultation with stakeholders, and ensuring accountability in decision-making, these regulatory changes aim to create a more robust framework for resolving insolvency and bankruptcy cases in India. It is anticipated that these amendments will contribute to the smooth functioning of the insolvency ecosystem, promote investor confidence, and ultimately facilitate the timely resolution of distressed assets, thereby fostering a healthier business environment.
