What Are IBBI’s Key Changes in Resolution Process Norms For Corporate Persons?

The Insolvency & Bankruptcy Board of India (IBBI) amended the regulations related to the insolvency resolution process for corporate persons to streamline the corporate insolvency resolution process (CIRP).

The changes in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations 2024 are effective from 15 February, the IBBI said in a statement.

Following are the key modifications:

Bank Accounts For Real Estate Projects

• The amendment makes it mandatory to have a separate bank account for each real estate project under a corporate debtor to ensure financial transparency and accountability.

Creditors Meeting

• The resolution professional is mandated to convene a committee of creditors (CoC) meeting at least once every 30 days, with a provision to extend the interval between meetings to a maximum of one meeting per quarter, if CoC so decides.

Voting Procedures

• The amended regulation empowers the CoC to decide the period of opening of electronic voting window with a minimum of 24 hours and a maximum of seven days with further increments of 24 hours each.

• The amendment also mandates that where the matters listed for voting have already received requisite majority vote, the resolution professional shall provide one last opportunity to vote by extending the voting window by a maximum period of 24 hours.

Resolution Process Costs

• The amendment mandates resolution professional to seek approval from the CoC for all costs, including going concern costs related to the CIRP, in order to enhance the oversight of the CoC over going concern costs.

Valuation Methodology Rationale

• The amendment provides for explaining the valuation methodology to the CoC before the computation of estimates to increase transparency and reduce disputes over valuation-related issues.

Fair Value Disclosure

• The amendment provides that the fair value may be made part of the information memorandum for fostering informed participation in the process. However, the CoC, after recording the reasons, can decide not to share such an information where in it’s considered view such a disclosure is not beneficial for the resolution.

Resolution Plans For Real Estate Cases

• The amendment clarifies that after due examination, the CoC may direct the resolution professional to invite separate plan for each real estate project, as each project in a real estate case may need different treatment in terms of resolution.

Monitoring Committee Constitution

• The amendment enables the CoC to decide for constitution of a monitoring committee for overseeing the implementation of the resolution plan.

• The committee may include the resolution professional, any other insolvency professional or any other person as its member.

• In case the resolution professional is made part of the committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the CIRP.

Resolution Process Continuation

• The amendment clarifies that the resolution professional will continue to discharge the responsibilities under the resolution process until the adjudicating authority decides an application for extension.

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