Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024 - IBBI/2023-24/GN/REG112 - Insolvency and Bankruptcy

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA NOTIFICATION New Delhi, the 12th February, 2024 Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024 No. IBBI/2023-24/GN/REG112. In exercise of the powers conferred by clause (t) of sub-section (1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations to further amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 , namely: - 1. (1) These Regulations may be called the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereinafter referred to as 'the principal regulations'), in regulation 2B, in sub-regulation (1), for the second proviso, the following provisos shall be substituted, namely:- Provided further that the liquidator shall file the proposal of compromise or arrangement only in cases where such recommendation has been made by the committee under regulation 39BA of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016: Provided further that the liquidator shall not file such proposal after expiry of thirty days from the liquidation commencement date. 3. In the principal regulations , in regulation 14 , for the words he may apply to the Adjudicating Authority , the words he shall consult the consultation committee and if it advises for early dissolution, he may apply, along with a detailed report incorporating the views of the consultation committee, to the Adjudicating Authority , shall be substituted. 4. In the principal regulations , in regulation 31A , (i) in sub-regulation (1), (a) in clause (e), for the word and mark distributed. , the word and mark distributed; , shall be substituted. (b) after clause (e), the following clauses shall be inserted, namely:- (f) review of marketing strategy in case of failure of sale of corporate debtor as a going concern; (g) continuation or institution of any suits or legal proceedings by or against the corporate debtor; (h) extension of payment of balance sale consideration as provided in clause (12) of Para 1 of Schedule I, beyond ninety days, to be disclosed in the auction notice. (ii) in sub-regulation (6), after the proviso, the following additional provisos, shall be inserted, namely:- Provided further that the liquidator shall convene subsequent meetings within thirty days of the previous meeting, unless the consultation committee has extended the period between such meetings: Provided further that there shall be at least one meeting in each quarter. (iii) after sub-regulation (6), the following sub-regulations shall be inserted, namely:- (6A) In all cases where the liquidator proposes to continue or initiate any legal proceeding, he shall, after presenting the economic rationale for the proposal, seek the advice of the consultation committee. (6B) In every meeting, the liquidator shall present to the consultation committee: (a) the actual liquidation cost along with reasons for exceeding the estimated cost, if any; (b) the consolidated status of all the legal proceedings; and (c) the progress made in the process. (iv) in sub-regulation (9), the following explanation shall be inserted, namely:- Explanation: For the purpose of this sub-regulation, the term voting ‟ shall mean voting cast by the representatives of the consultation committee. 5. In the principal regulations , in regulation 32A , (i) in sub-regulation (4), the following explanation shall be inserted, namely:- Explanation: For the purpose of this sub-regulation, it is hereby clarified that the sale of the corporate debtor under clause (e) of regulation 32 cannot be offered as the only option for bidders after the first auction. (ii) after sub-regulation (4), the following sub-regulation shall be inserted, namely:- (5) Where the liquidator is of the opinion that it is viable to run the corporate debtor as a going concern, he shall consult the consultation committee and only on its advice he shall run the affairs of the corporate debtor as a going concern to the extent approved. 6. In the principal regulations , in regulation 33 , in sub-regulation (2), (i) for the words private sale in the manner specified in Schedule I when , the words, private sale only after prior consultation with the consultation committee under regulation 31A, in the manner specified in Schedule I when , shall be substituted. (ii) in clause (b), after the word and mark immediately; , the word or , shall be inserted. (iii) clause (c) shall be omitted. 7. In the principal regulations , in regulation 35 , (i) in sub-regulation (2), for the words, where the liquidator is of the opinion , the words, where the liquidator after consultation with the consultation committee under regulation 31A, is of the opinion , shall be substituted. (ii) after sub-regulation (4), the following sub-regulations shall be inserted, namely:- (5) Where valuation is undertaken as per sub-regulation (2), the liquidator shall facilitate a meeting wherein registered valuers shall explain the methodology being adopted to arrive at valuation to the consultation committee before finalisation of valuation reports. (6) The liquidator shall share the valuation reports with the members of the consultation committee after obtaining an undertaking that they shall maintain the confidentiality of such reports and shall not use these reports to cause an undue gain or undue loss to itself or any other person. (7) In case there is deviation of twenty five percent in the valuation of an asset class under sub-regulation (2) from valuation under regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the liquidator shall facilitate a meeting wherein the registered valuers shall explain the reasons for the difference to the consultation committee. 8. In the principal regulations, in regulation 46 , (i) for sub-regulation (7), the following sub-regulations shall be substituted, namely:- (7) Prior to dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited into the Corporate Liquidation Account, may apply to the liquidator in Form-I for withdrawal of the amount. (7A) On receipt of request under sub-regulation (7), the liquidator after verification of the claim, shall request the Board for release of amount to him for onward distribution. (7B) The Board on receipt of request under sub-regulation (7A) may release the amount to the liquidator. (7C) The liquidator shall, after making the distribution to the stakeholder, shall intimate the Adjudicating Authority of such distribution. (7D) After dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited in the Corporate Liquidation Account, may apply to the Board in Form-I for an order for withdrawal of the amount. (7E) If any person other than the stakeholder claims to be entitled to any amount deposited to the Corporate Liquidation Account, he shall submit evidence to satisfy the liquidator or the Board, as the case may be, that he is so entitled. (ii) in sub-regulation (8), for the expression sub-regulation (7) , the expression sub-regulation (7D) , shall be substituted. 9. In the principal regulations , after regulation 46 , the following regulation shall be inserted, namely: - 46A. Exclusion of certain assets from the liquidation estate. For the purposes of clause (e) of sub-section (4) of section 36, wherever the corporate debtor has given possession to an allottee in a real estate project, such asset shall not form a part of the liquidation estate of the corporate debtor. 10. In the principal regulations , in Schedule I , in para 1, (i) in clause 3, after the proviso, the following proviso shall be inserted, namely:- Provided further that the liquidator shall mention in the auction notice, the period extended under clause (h) of sub-regulation (1) of regulation 31A. (ii) for clause (4), clause (4A) and clause (4B), the following clause shall be substituted, namely:- (4) The reserve price shall be the value of the asset arrived at in accordance with regulation 35 and where an auction fails, the reserve price in subsequent auctions may be further reduced by not more than ten percent at a time: Provided that in cases where the reserve price of the failed auction of the asset was fixed as per the valuation under sub-regulation (1) of regulation 35, the liquidator may, on the advice of the consultation committee, reduce the reserve price up to twenty-five percent, once during the process. (iii) for clause (12), the following clause shall be substituted, namely:- (12) On the close of the auction, the highest bidder shall be invited to provide balance sale consideration within ninety days or such period as mentioned in the auction notice under clause 3, of the date of such demand: Provided that payments made after thirty days shall attract interest at the rate of twelve per cent.: Provided further that the sale shall be cancelled if the payment is not received within the period provided under this clause. 11. In the principal regulations, in Schedule I, in para 2, after clause (3), the following clause shall be inserted, namely:- (3A) The private sale shall be confirmed to the buyer after consultation with the consultation committee under regulation 33. 12. In the principal regulations , in Schedule II, for Form A, the following Form shall be substituted, namely:- FORM A PROFORMA FOR REPORTING CONSULTATIONS WITH STAKEHOLDERS (Under Regulation 8 and Regulation 31A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016) Sl. No. Basic details of CD and meeting (a) Name and Registration no. of Liquidator (b) Name of corporate debtor (c) Date of the meeting (d) Date of last meeting (e) Number of days since last meeting (f) Details of agenda of last meeting which were not approved by the SCC - Details of agenda items Para of the minutes of the meeting where the same was discussed Remarks (a) Remuneration of professionals appointed under regulation 7, including process advisors, IPE, etc. (b) Sale under regulation 32, including manner of sale, pre-bid qualifications, reserve price, marketing strategy and auction process (c) Fees of the liquidator (d) Valuation under sub-regulation (2) of regulation 35 (e) Status of Litigations and cost benefit analysis of pursuing these litigations (f) Preliminary report (g) Manner in which proceedings in respect of preferential transactions, undervalued transaction, extortionate credit transaction or fraudulent or wrongful trading, if any, shall be pursued after closure of liquidation proceedings and the manner in which the proceeds, if any, from these proceedings shall be distributed (h) Liquidation cost (i) Extension of time period for payment of balance sale consideration beyond ninety days (j) Running the business of the corporate debtor in the event the same is economically unviable (k) Early dissolution of the corporate debtor (l) Any other agenda item 13. In the principal regulations, in Schedule II, in Form H, (i) in para 4, for clause (b), the following clause shall be substituted, namely:- (b) Amount realised during the liquidation process: Sl. No. Realisations Amount (Rs.) 1. Opening balance as on liquidation commencement date (A) Realisations (B) 2. Auctions of assets 3. Private sales of assets 4. Assignment of not readily realisable assets 5. Distribution of unsold asset 6. Others (specify) Total (A+B) (ii) after para 4, the following paras shall be inserted, namely:- 4A. Details of realisation of security interest by secured creditor under section 52: Sl. No. Particulars Details 1. Number of secured creditors who did not relinquish security interest 2. Liquidation value of such security interest (Rs.) 3. Amount of admitted claim of secured creditors (Rs.) 4. Total realisation from such security interest (Rs.) 5. Total Contribution made as per regulation 21A(2) (Rs.) (i+ii+iii) i. Contribution made by secured creditors toward workmen's dues (Rs.) ii. Contribution made by secured creditors toward unpaid CIRP and Liquidation Cost (Rs.) iii. the excess of the realised value of the asset (Rs.) 6. Realised value received by secured creditor (Rs.) 7. Date of realisation by secured creditor 4B. Details of assignment of not readily realisable assets: Sl. No. Particulars Details 1. Details of the assets 2. Liquidation value of the assets (Rs.) 3. Amount realised (Rs.) 4. Name of the bidder 5. Sharing of proceeds between bidder and creditors/ corporate debtor, if any 6. Schedule of realisation by bidder RAVI MITAL, Chairperson [ADVT.-III/4/Exty./749/2023-24] Note : The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 were published vide notification No. IBBI/2016-17/GN/REG005 dated 15th December, 2016 in the Gazette of India, Extraordinary, Part III, Section 4, vide No. 460 on 15th December, 2016 and were last amended by Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2022 vide notification No. IBBI/2022-23/GN/REG094 dated the 16th September, 2022 in the Gazette of India, Extraordinary, Part III, Section 4, vide No. 456 on 16th September, 2022.