Regulation 2A - Contributions to liquidation costs - Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

1 [2A. Contributions to liquidation costs. (1) Where the committee of creditors did not approve a plan under sub-regulations (3) of regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the liquidator shall call upon the financial creditors, being financial institutions, to contribute the excess of the liquidation costs over the liquid assets of the corporate debtor, as estimated by him, in proportion to the financial debts owed to them by the corporate debtor. Illustration Assume that the excess of liquidation costs over liquid assets is 10, as estimated by the liquidator. Financial creditors will be called upon to contribute, as under: Sl. No. Financial creditors Amount of debt due to financial creditors (Rs.) Amount to be contributed towards liquidation cost (Rs.) (1) (2) (3) (4) 1 Financial institution A 40 04 2 Financial institution B 60 06 3 Non-financial institution A 50 00 4 Non-financial institution B 50 00 Total 200 10 (2) The contributions made under the plan approved under sub-regulation (3) of regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or contributions made under sub-regulation (1), as the case may be, shall be deposited in a designated escrow account to be opened and maintained in a scheduled bank, within seven days of the passing of the liquidation order. (3) The amount contributed under sub-regulation (2) shall be repayable with interest at bank rate referred to in section 49 of the Reserve Bank of India Act, 1934 (2 of 1934) as part of liquidation cost. ] 2 [ Explanation .- It is hereby clarified that the requirements of this regulation shall apply to the liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019. ] ********* Notes 1. Inserted vide NOTIFICATION No. IBBI/2019-20/GN/REG047 dated 25-07-2019 2. Inserted vide Notification No. IBBI/2022-23/GN/REG082 dated 28-04-2022