Oct 01, 2017IBC Update: First Information Utility
National e-Governance Services Limited (‘NeSL’), a Union Government company that received an in-principle approval for establishing an information utility (‘IU’) in June, 2017, has now received the final approval to become India’s first IU with the initial registration valid till September 24, 2022. Indira Gandhi Institute of Development Research has been appointed as the knowledge partner of NeSL, and Mr. S Ramann has been appointed as the Managing Director and Chief Executive Officer. The framework of NeSL is governed by the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017.
Under the Insolvency and Bankruptcy Code, 2016 (‘IBC’), IUs are envisaged as record keeping entities which assist in providing accurate, secure and the most up-to-date financial information relating to companies which will assist creditors and other stakeholders in the context of insolvency proceedings.
IUs are designed to provide services such as accepting, authenticating and providing access to financial information. Under the IBC, the information stored with an IU can be relied upon by the National Company Law Tribunal (‘NCLT’) at the time of admission of an insolvency application. Such information will assist in determining whether a payment default has occurred or if there is a pre-existing dispute in relation to an IBC application filed by an operational creditor. In addition, IUs are also envisaged to function as a public record of security interests created by companies in favour of creditors and such record can be relied upon by creditors to establish perfection of security in a liquidation scenario.
Persons permitted to access information stored with an IU include the debtor, the subject creditor, the insolvency professional, the NCLT, the Insolvency and Bankruptcy Board of India and other persons who are permitted to access such information by the debtor or the creditor, as the case may be (subject to payment of prescribed fees).
This is an important and much awaited development in the restructuring and banking space, and we are hopeful that the many expected benefits of an IU for various stakeholders will emerge soon.