Aiming to reduce delays and realise better value, the Insolvency and Bankruptcy Board of India (IBBI) has notified the IBBI (Liquidation Process) (Second Amendment) Regulations 2022 (Amendment Liquidation Regulations), and IBBI (Voluntary Liquidation Process) (Second Amendment) Regulations 2022 (Amendment Voluntary Liquidation Regulations).
These were notified on September 16, official sources said.
The amendments would ensure better participation of stakeholders and streamline the liquidation process to reduce delays, they added.
Post the modifications, the Committee of Creditors (CoC) constituted during the Corporate Insolvency Resolution Process (CIRP) would function as Stakeholders Consultation Committee (SCC) during the first 60 days.
After adjudication of claims and within 60 days of initiation of process, the SCC shall be reconstituted based upon the admitted claims.
Also, as per the modifications, the liquidator has been mandated to conduct meetings of SCC in a structured and time-bound manner with better participation of stakeholders.
The scope of mandatory consultation by the liquidator with SCC has been enhanced. Now, SCC may even propose replacement of liquidator to the Adjudicating Authority (AA) and fix the fees of the liquidator, in case the CoC has not fix it during the CIRP.
If any claim is not filed during the liquidation process, the amount of claim collated during CIRP shall be verified by the liquidator.
Wherever the CoC decides that the process of compromise or arrangement may be explored during the liquidation process, the liquidator shall file application only in such cases before the Adjudicating Authority, for considering the proposal of compromise or arrangement, if any, within thirty days of the order of liquidation.
Also, specific event-based timelines have been stipulated for the auction process. In addition to this, before filing of an application for dissolution or closure of the process, SCC shall advise the liquidator about the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading, shall be pursued after closure of liquidation proceedings.