Feb 29, 2024

Amendments to IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

The Insolvency and Bankruptcy Board of India (‘IBBI’) has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations’) on February 15, 2024.

Key modifications are summarised below:

1. For Real Estate Projects –

i.    The IBBI has made it mandatory for resolution professionals (‘RPs’) of real estate projects to maintain and operate separate bank accounts for real estate projects, to ensure financial transparency and accountability; and

ii.   The CIRP Regulations also prescribe that the RP may, upon the approval of the committee of creditors (‘CoC’), invite separate plans for each project, after due examination.

2. Monthly Meetings of the CoC – The RP has been mandated to convene a CoC meeting at least once in every 30 days.

3. Voting Procedures –

i.    The period of opening the electronic voting window to seek votes of the members who did not vote at the meeting (in person) has been prescribed to be between 24 hours to seven days;

ii.   It is further prescribed that upon a request made by the creditor, the window is to be extended further by 24 hours; and

iii.  If a matter has already received requisite majority, and one extension has been given after receiving the requisite majority, the RP must not extend the window further.

4. Approval of Insolvency Process Costs – The RP has been required to place before the CoC, the operational status of the corporate debtor and seek approval for all costs which are part of the corporate insolvency resolution process (‘CIRP’).

5. Valuation –

i.    Before computation of estimates, the CoC is required to facilitate a meeting wherein registered valuers must explain the valuation methodology to the CoC;

ii.   It is also prescribed that the RP must provide the valuation report along with fair value and liquidation value to the members of the CoC subject to confidentiality and undertaking to not use the information for undue gains; and

iii.  The CIRP Regulations also prescribe that the fair value estimated may form a part of the information memorandum. However, in case the CoC decides to not include this information, reasons for such omission need to be recorded.

6. Monitoring Committee (‘MC’) for Implementation of Resolution Plan – If the CoC upon consideration requires the MC for implementation of the resolution plan, it may, while approving the resolution plan, decide to constitute the MC with the RP or propose any other insolvency professional or any other person as its member. In case the RP is made part of the MC, the monthly fee payable shall not exceed the monthly fee received by him during the CIRP.

7. Continuation of the Resolution Process Pending Extension Application – It has been clarified that the RP is required to discharge his responsibilities under the CIRP till the application for extension is decided by the adjudicating authority.

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