ERGO Analysing Developments Impacting Business: Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second…

Introduction

The Insolvency and Bankruptcy Board of India (the Board) vide its circular no. IBBI/2022-23/GN/REG084 dated 14 June 2022, in exercise of the powers conferred under clause (t) of sub- section (1) of section 196 read with sections 7, 9 and 240 of the Insolvency and Bankruptcy Code, 2016 (the Code) has introduced the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022 (Amendment Regulations).

Amendments

The Key amendments introduced by the Amendment Regulations are as follows:

provides for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the approval of the resolution plan and the manner in which the proceeds, if any, from such proceedings shall be distributed:

Provided 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, 2022.

Comments

Conclusion

The Amendment Regulations provide for much needed changes and appear to have been prepared after considering the difficulties faced by stakeholders in a CIR process. The provisions dealing with flow of information to the IRP/RP may help in enhancing the speed and efficacy of the CIR Process. Interestingly, the amendment related to a resolution plan having a provision for dealing with avoidable transactions and the proceeds thereof shall not be applicable to plans which have been submitted to the adjudicating authority, however, if plans have been approved by a committee of creditors but not submitted to the adjudicating authority, they may have to be modified for dealing with this requirement. This would have to be seen in view of the earlier amendments which mandated that a plan could be modified only once.

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ERGO Analysing Developments Impacting Business: Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second...