The Insolvency and Bankruptcy Board of India (‘IBBI’), on September 18, 2023, amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations’).
Key changes under the latest amendments to the CIRP Regulations are summarised below:
|Additional Details To Be Submitted With an Application Under Section 7 and 9 of the Insolvency and Bankruptcy Code
|Creditors filing an application to initiate the corporate insolvency resolution process (‘CIRP’) under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016, are now also required to submit (along with evidence) the following details:
|Detailed Procedure for Handing Over of Custody of Corporate Debtor’s Records of Information and Assets, to Resolution Professional
|i. The amendment sets out a detailed procedure for handing over of custody and control of:
ii. The personnel of the corporate debtor are required to provide the RP with a list of assets and records being handed over. If such a list is not provided, the RP is required to prepare a list of assets and records while taking custody. This list needs to be signed by all the parties who are present and at least two individuals who have witnessed the handing over of custody of the assets and records.
iii. The RP may also requisition from the personnel of the corporate debtor, any records (which are required to be maintained but have not been handed over) or assets (which are recorded in the balance sheet but have not been handed over).
|Timelines for Submission of Proof of Claims
|i. A creditor who fails to submit his claim before the last date (specified in the public announcement issued post admission into CIRP (i.e., 14 days from appointment of the interim resolution professional)), may submit its claim by the date of issue of request for resolution plans or 90 days from the insolvency commencement date, whichever is later.
ii. If a creditor claim is received after this period and up to seven days before the date of meeting of creditors to vote on the resolution plan or initiation of liquidation, then the RP is required to verify the claim, and categorise it as ‘acceptable’ or ‘non-acceptable’ for collation.
iii. If the claim is categorised as ‘non-acceptable’, then the RP is required to intimate the creditor within seven days of such categorisation along with reasons for such non-acceptance.
iv. If the claim is categorised as ‘acceptable’ then the RP is required to:
|Replacement of Authorised Representatives
|i. Financial creditors in a class holding not less than ten percent voting share may seek replacement of their authorised representative with an insolvency professional of their choice by making a request to the RP. The RP is mandated to circulate this request to all creditors in that class and announce a voting window for at least twenty-four hours.
ii. The RP is required to offer a choice of at least three insolvency professionals to the financial creditors in that class (including the existing authorised representative as well as the proposed insolvency professional). The RP is required to apply to the NCLT to appoint the insolvency professional who receives the highest percentage of voting share of financial creditors in that class as their authorised representative.
|i. Fees payable to the authorised representatives of creditors in a class have been increased for meetings attended by them. For instance:
ii. Additional duties and responsibilities have been imposed on the authorised representative of creditors in a class to protect the interest of the class during CIRP. For instance, assisting the creditors in understanding the discussions of CoC meetings and evaluating the resolution plan, regularly updating the creditors on the progress of the CIRP, among others.
iii. Details of assignment or transfer of debt (i.e., terms of assignment and the identity of the assignee) during CIRP to be provided to the RP within seven days of such assignment or transfer.
iv. Any member of the CoC may propose an audit of the corporate debtor (along with objectives, scope, estimate of costs, timeframe, and name of the proposed auditor). This proposal will then be placed before the CoC.