IBBI amends insolvency norms for corporate persons

The Insolvency and Bankruptcy Board of India (IBBI) has amended the regulations for insolvency process of corporate persons with effect from Thursday.

An official statement on Friday said that some of the amendments are consequential to the Insolvency and Bankruptcy Code (Amendment) Act, 2019, which came into force on August 5, 2019.

"The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2019 on 28th November 2019," it said.

The amendment inserted Regulation "25A" which says: "The authorised representative shall cast his vote in respect of each financial creditor or on behalf of all financial creditors he represents in accordance with the provisions of sub-section (3) or sub-section (3A) of section 25A, as the case may be.".

"In the principal regulations, in Regulation 37, after clause (b), the following clause shall be inserted, namely -- (ba) restructuring of the corporate debtor, by way of merger, amalgamation and demerger," it said, among other amendments.

It also said that the amount payable under a resolution plan to the operational creditors shall be paid in priority over financial creditors and those financial creditors, who have a right to vote under sub-section (2) of section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.

The amendment also included Regulation 40B as per which the insolvency professional, interim resolution professional or resolution professional, shall file the necessary forms, along with the required enclosures, on an electronic platform of the board.

"In the interest of transparency and accountability in conduct of CIRPs (corporate insolvency resolution process) and conduct of the IPs (insolvency professional), and to facilitate the IBBI, the IPAs and the IPs to discharge of their statutory obligations, the Amendment Regulations require the IPs to file a set of Forms, covering the life cycle of a CIRP, online on an electronic platform hosted on the website of the IBBI," the Corporate Affairs Ministry statement said.

An IP shall be liable to action permissible under Insolvency and Bankruptcy Code, including refusal to issue or renew authorisation for assignment, for failure to file a form or for inaccurate or delayed filing, it added.