The Insolvency and Bankruptcy Board of India (IBBI) has amended its rules in a bid to streamline the liquidation process for reducing delays and realising better value.
The move would also enable better participation of stakeholders.
IBBI is a key institution implementing the Insolvency and Bankruptcy Code (IBC).
Under this, Insolvency and Bankruptcy Board of India (Liquidation Process) rules and Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) norms have been amended. This became effective from September 16, according to an official release on Tuesday.
As part of the modifications, the Committee of Creditors (CoC) constituted during the Corporate Insolvency Resolution Process (CIRP) will function as Stakeholders Consultation Committee (SCC) in the first 60 days.
After adjudication of claims and within 60 days of initiation of the process, the SCC will be reconstituted based upon admitted claims.
The liquidator has been mandated to conduct the meetings of SCC in a structured and time-bound manner with better participation of stakeholders.
Also, the scope of mandatory consultation by liquidator with SCC has been enlarged.
Now, SCC may even propose replacement of liquidator to the Adjudicating Authority (AA) and fix the fees of liquidator, if the CoC did not fix the same during CIRP.
If any claim is not filed during liquidation process, then the amount of claim collated during CIRP will be verified by the liquidator.
Wherever the CoC decides that the process of compromise or arrangement may be explored during liquidation process, the liquidator will have to file application only in such cases before the Adjudicating Authority for considering the proposal of compromise or arrangement, if any, within 30 days of the order of liquidation.
Besides, specific event-based timelines have been stipulated for auction process.
Before filing of an application for dissolution or closure of the process, SCC will have to advice the liquidator on the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading will be pursued after closure of liquidation proceedings.
The new rules further lay down the manner and period of retention of records relating to liquidation and voluntary liquidation of a corporate debtor or corporate person, respectively.