Regulation 31A - Stakeholders’ consultation committee - Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

1 [31A. Stakeholders consultation committee. 2 [ 6 [ ((1) The liquidator shall constitute a consultation committee, comprising of all creditors of the corporate debtor, within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on matters relating to- (a) remuneration of professionals appointed under regulation 7; (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) the 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 15 [ distributed; ]]] 16 [ (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. ] 7 [ (1A) The committee of creditors under section 21 shall function as the consultation committee with same voting rights till constitution of the consultation committee under sub-regulation (1). ] 8 [( 2) The voting share of a member of the consultation committee shall be in proportion to his admitted claim in the total admitted claim: Provided a secured creditor who has not relinquished his security interest under section 52 shall not be part of the consultation committee; Provided that the promoters, directors, partners or their representatives may attend the meeting of the consultation committee, but shall not have any right to vote. Provided further that a financial creditor or his representative, if he is a related party of the corporate debtor, shall not have right to vote. ] 9 [ (3) The liquidator may facilitate the stakeholders of each class namely financial creditors in a class, workmen, employees, government departments, other operational creditors, shareholders, partners, to nominate their representative for participation in the consultation committee. ] 3 [ (4) If the stakeholders of any class fail to nominate their representatives, under sub-regulation (3), such representatives shall be selected by a majority of voting share of the class, present and voting. ] 10 [ (4A) the representative under sub-regulation (3) or (4) shall vote in proportion to the voting share of the stakeholders it represents. ] (5) Subject to the provisions of the Code and these regulations, representatives in the consultation committee shall have access to all relevant records and information as may be required to provide advice to the liquidator under sub-regulation (1). 11 [ (6) The liquidator shall convene the first meeting of the consultation committee within seven days of the liquidation commencement date and may convene other meetings, if he considers necessary, on a request received from one or more members of the consultation committee: Provided that when a request is received by the liquidator from members, individually or collectively, having at least thirty three percent of the total voting rights, the liquidator shall mandatorily convene the meeting. ] 17 [ 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. ] 18 [ (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. ] (7) The liquidator shall chair the meetings of consultation committee and record deliberations of the meeting. (8) The liquidator shall place the recommendation of committee of creditors made under sub-regulation (1) of regulation 39C of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, before the consultation committee for its information. (9) The consultation committee shall advise the liquidator, by a vote of not less than sixty-six percent of the representatives of the consultation committee, 12 [ voting ] . 19 [ Explanation: For the purpose of this sub-regulation, the term voting ‟ shall mean voting cast by the representatives of the consultation committee. ] (10) The advice of the consultation committee shall not be binding on the liquidator: Provided that where the liquidator takes a decision different from the advice given by the consultation committee, he shall record the reasons for the same in writing 4 [ 13 [ submit the records relating to the said decision, to the Adjudicating Authority and to the Board within five days of the said decision; and include it in the next progress report ]] . 5 [ 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. ] 14 [ (11) The consultation committee, after recording the reasons, may by a majority vote of not less sixty-six per cent., propose to replace the liquidator and shall file an application, after obtaining the written consent of the proposed liquidator in Form AA of the Schedule II, before the Adjudicating Authority for replacement of the liquidator : Provided that where a liquidator is proposed to be replaced, he shall- (a) continue to work till his replacement; and (b) be suitably remunerated for work performed till his replacement. Provided that where a consultation committee under Regulation 31A has been constituted before the commencement of Insolvency and Bankruptcy Board of India (Liquidation Process) (Second mendment) Regulations, 2022, the liquidator within thirty days of the commencement of the said Regulations, shall reconstitute the consultation committee as required under the said Regulations and provisions provided under amended Regulation 31A shall come into effect only after such constitution. ] ********* Notes 1. Inserted vide NOTIFICATION No. IBBI/2019-20/GN/REG047 dated 25-07-2019 2. Substituted vide Notification No. IBBI/2021-22/GN/REG079 dated 30-09-2021 before it was read as (1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on the matters relating to sale under regulation 32. 3. Substituted vide Notification No. IBBI/2021-22/GN/REG079 dated 30-09-2021 before it was read as (4) If the stakeholders of any class fail to nominate their representatives, the required number of stakeholders with the highest claim amount in that class shall be included in the consultation committee. 4. Inserted vide Notification No. IBBI/2021-22/GN/REG079 dated 30-09-2021 5. Inserted vide Notification No. IBBI/2022-23/GN/REG082 dated 28-04-2022 6. Substitute vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , before it was read as :- (1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on matters relating to- (a) appointment of professionals and their remuneration under regulation 7; (b) sale under regulation 32, including manner of sale, pre-bid qualifications, reserve price, amount of earnest money deposit, and marketing strategy: Provided that the decision(s) taken by the liquidator prior to the constitution of consultation committee shall be placed before the consultation committee for information in its first meeting. 7. Inserted vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 . 8. Substitute vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , before it was read as :- (2) The composition of the consultation committee under sub-regulation (1) shall be as shown in the Table below: Table Class of Stakeholders Description Number of Representatives (1) (2) (3) Secured financial creditors, who have relinquished their security interests under section 52 Where claims of such creditors admitted during the liquidation process is less than 50% of liquidation value Number of creditors in the category, subject to a maximum of 2 Where claims of such creditors admitted during the liquidation process is at least 50% of liquidation value Number of creditors in the category, subject to a maximum of 4 Unsecured financial creditors Where claims of such creditors admitted during the liquidation process is less than 25% of liquidation value Where claims of such creditors admitted during the liquidation process is at least 25% of liquidation value Number of creditors in the category, subject to a maximum of 1 Number of creditors in the category, subject to a maximum of 2 Workmen and employees 1 1 Governments 1 1 Operational creditors other than Workmen, employees and Governments Where claims of such creditors admitted during the liquidation process is less than 25% of liquidation value Number of creditors in the category, subject to a maximum of 1 Where claims of such creditors admitted during the liquidation process is at least 25 % of liquidation value Number of creditors in the category, subject to a maximum of 2 Shareholders or partners, if any 1 9. Substitute vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , before it was read as :- The liquidator may facilitate the stakeholders of each class to nominate their representatives for inclusion in the consultation committee. 10. Inserted vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , 11. Substitute vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , before it was read as :- (6) The liquidator shall convene a meeting of the consultation committee when he considers it necessary and shall convene a meeting of the consultation committee when a request is received from at least fifty-one percent of representatives in the consultation committee. 12. Substitute vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , before it was read as :- present and voting 13. Substitute vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , before it was read as :- and mention it in the next progress report 14. Inserted vide Notification No. IBBI/2022-23/GN/REG094 dated 16-09-2022 , 15. Substituted vide Notification No. IBBI/2023-24/GN/REG112 dated 12-02-2024 before it was read as, distributed 16. Inserted vide Notification No. IBBI/2023-24/GN/REG112 dated 12-02-2024 17. Inserted vide Notification No. IBBI/2023-24/GN/REG112 dated 12-02-2024 18. Inserted vide Notification No. IBBI/2023-24/GN/REG112 dated 12-02-2024 19. Inserted vide Notification No. IBBI/2023-24/GN/REG112 dated 12-02-2024