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TMI BlogPROPOSED AMENDMENTS TO INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... PROPOSED AMENDMENTS TO INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2016 X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Insolvency Resolution for Interconnected Entities; * Presentation of All Resolution Plans before the Committee of Creditors ('CoC' for short); * Mandatory Submission of Statement of Affairs by Corporate Debtors; * Reliefs and Concessions subsequent to approval of Resolution Plan; * Incentivizing Interim Finance Providers; * Disclosure and Treatment of Avoidance Transactions; * Request for resolution plans for part wise resolution of Corporate Debtor; * Empowering CoC for Expedited Implementation of Resolution Plans; * Non-receipt of Repayment Plan under Insolvency Resolution of Personal Guarantor; * Sale of Corporate Debtor as a going concern; * Review of expenditure on operational expenses including leased propertie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, by CoC. Proposed amendments The discussion paper also put on the amendments to be made in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ('Regulations' for short). Statement of Affairs The amendment proposes to insert a new regulation 2E dealing with filing of the statement of affairs by the Corporate Debtor. The Corporate Debtor shall file a reply for the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ('Code' for short) before the Adjudicating Authority. Along with the reply the Corporate Debtor shall file a statement of affairs before the Adjudicating Authority. The said Statement of Affairs shall contain- * the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of assets and liabilities of the corporate debtor as reflected in its latest annual financial statements; * the total number of employees and workmen, * the location where books of accounts are maintained, and the names of persons having custody thereof. The corporate debtor shall attach copies of its financial statements for the preceding three financial years with the statement of affairs. Providers of Interim Finance to attend CoC The amendment proposes to insert Regulation 18(5) which provides that the committee may direct the resolution professional to invite the providers of interim finance to attend such meeting(s) of the committee, as the committee may decide, without voting rights, as observers. Essential supplies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amendment proposes to delete the existing illustration which deals with the water supply as an essential service and proposes to insert an illustration dealing with the electricity supply. According to the new inserted illustration, electricity supplied to a corporate debtor for maintaining basic facility upkeep such as lighting and powering computers would constitute essential services. However, if the corporate debtor operates a manufacturing facility, the high-voltage electricity supply required to run the machinery may be considered as critical services by the insolvency professional as it is being used as a direct input for production and current dues for such services must be paid during CIRP to prevent any service discontin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation. Assessment Report The amendment proposes to insert a new Regulation 32A dealing with the management of operational expenses including leased properties. The new Regulation requires the Resolution Professional to prepare an Assessment Report and to submit the same before the CoC within 30 days of the Constitution of CoC. The Assessment report shall include- * in respect of leased properties- * Details of existing lease agreements including tenure, payment schedules, and outstanding obligations; * Current utilization status and occupancy details; and * Assessment of criticality for maintaining the corporate debtor as a going concern; * financial impact analysis of continuing such operational expenses on the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate insolvency resolution process. The CoC shall review the assessment report within 15 days of the receipt of the said report and take appropriate decisions for the continuation or discontinuation of certain operational expenses. In respect of leased properties, the CoC shall explicitly approve the continuation or surrender or termination of each lease agreement. The Resolution Professional shall include a quarterly review of such expenses as a mandatory agenda item in committee meeting. He shall also present updates on their financial impact on the corporate insolvency resolution process. Information memorandum The amendment proposes to add certain words in Regulation 36(1). After such insertion Regulation 36(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides that subject to sub-regulation (4), the resolution professional shall submit the information memorandum in electronic form to each member of the committee on or before the ninety-fifth day from the insolvency commencement date and its subsequent updates thereof. The amendment also proposes to insert a new sub regulation 36(2) (ha) which provides that details of all identified avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code and subsequent filings before Adjudicating Authority, as referred under sub-regulation (3A) of regulation 35A. Resolution plans for part wise resolution Regulation 36B(1) provides that the resolution professional shall, wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin five days of the date of issue of the final list under sub-regulation (12) of regulation 36A, issue the information memorandum, evaluation matrix and a request for resolution plans to every resolution applicant in the final list. The amendment proposes to insert a provision to Regulation 36B (1) which provides that the resolution professional may, with the approval of the committee simultaneously invite resolution plans for the corporate debtor as a whole or one or more assets of the corporate debtor. Further the amendment proposes to delete Regulation 36B(6A) which provides that if the resolution professional, does not receive a resolution plan in response to the request under this regulation, he may, with the approval of the committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, issue request for resolution plan for sale of one or more of assets of the corporate debtor. Contents of resolution plan Regulation 38(2) describes what are to be included in the resolution plan. The amendment proposes new sub regulation 38(2)(e). The new sub regulation provides that a resolution plan shall not provide for assignment of any avoidance transactions, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code that were not: (a) disclosed in the information memorandum; and (b) intimated to all prospective resolution applicants under regulation 35A(3A) before the last date for submission of resolution plans, to resolution applicant or the corporate debtor. The proviso to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation provides that this clause shall not apply to any resolution plan that has been submitted to the Adjudicating Authority under sub-section (6) of section 30 on or before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2025. Approval of resolution plan Regulation 39 provides for the approval of resolution plan. The amendment proposes to insert a new sub Regulation (2A) which provides that the resolution professional shall also submit to the committee the resolution plans received which are not in compliance with the provisions of the Code and these regulations and specify in detail the aspects of non-complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Further the amendment proposes to insert a new sub regulation (4A) in Regulation 39. The newly inserted Regulation 39(4A) provides that upon approval of the resolution plan by the Adjudicating Authority under Section 31, no modifications shall be sought by the resolution applicant in the resolution plan approved by the Adjudicating Authority. Phased approval of resolution plan The amendment proposes to insert a new Regulation 39AA for phased approval of resolution plan. Regulation 39AA provides that the committee may, by a vote of not less than 66% of voting share, recommend to the Adjudicating Authority to first approve the implementation of the resolution plan and thereafter approve the manner of distribution. Deletion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Regulation 39C The amendment proposes to delete Regulation 39C which deals with the assessment of sale as a going concern. Coordination of interconnected insolvency cases The amendment proposes insert a new Regulation 40E. The said regulation provides that where 2 or more corporate debtors undergoing CIPR are interconnected which may be based on the existence of control or significant ownership, the resolution professional of any such corporate debtor may file an application with the Adjudicating Authority for coordinated conduct of the processes, subject to obtaining prior approval of each committee of creditors by a vote of not less than 66% in value of the creditors voting in that CoC. The Adjudicating Authority may, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f satisfied that coordination would be in the best interests of the corporate debtors and their stakeholders, pass appropriate orders for:
* joint hearings;
* appointment of a common resolution professional;
* information sharing between the resolution professionals;
* coordination of timelines; or
* any other measure as deemed fit. X X X X Extracts X X X X X X X X Extracts X X X X
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