Introduction: The Insolvency and Bankruptcy Board of India (IBBI) has introduced significant amendments to the Corporate Insolvency Resolution Process (CIRP) regulations, aimed at improving transparency and accountability. These amendments, effective from February 15, 2024, address various aspects such as separate bank accounts for real estate projects, monthly Committee of Creditors (CoC) meetings, and electronic voting procedures.
IBBI has modified the Principal Regulation i.e. IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 vide Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 through new amendments dated 15th February, 2024 as discussed below.
1. Separate bank account for each real estate project (Regulation 4D)
If the corporate debtor is involved in any real estate projects, for each real estate project, the IRP/RP shall open and operate a separate bank account.
2. Monthly CoC meeting (Regulation 18)
A resolution professional is required to arrange a CoC meeting within 30 days following the previous one. However, the committee has the authority to extend the interval between meetings, provided that the CoC still mandates one meeting at least once every quarter.
3. Electronic voting (Regulation 25)
CoC can decide the period of opening of electronic voting window with minimum 24 hours and maximum 7 days with further increments of 24 hours each. The resolution professional can enable electronic voting for members who missed the meeting, which will remain open for maximum 24 hours. This option is only valid where the listed matters have already received the requisite majority.
4. Approval of process cost (Regulation 31B)
The insolvency professional must present the corporate debtor’s operational status in committee meetings and obtain approval for all insolvency resolution process costs. This will enhance the oversight of CoC on going concern costs.
5. Valuation methodology (Regulation 35)
The resolution professional must organize a meeting where registered valuers explain the valuation methodology to the CoC members before computation of estimates. This will avoid the dispute over valuation and will increase transparency.
6. Confidentiality of Reports (Regulation 35)
After receiving resolution plans, the resolution professional must give fair value, liquidation value, and valuation reports electronically to committee members and disclose in information memorandum. Members must commit to confidentiality and not use the information to benefit unfairly, complying with section 29(2).
7. Separate Resolution Plan for each real-estate project (Regulation 36A): CoC may direct the RP to invite separate plan for each project.
8. Non-disclosure of fair values (Regulation 36)
The committee can choose not to disclose the fair value if it believes, with written reasons, that it’s beneficial for the resolution process.
9. Monitoring committee (Regulation 38)
The committee can decide to establish a monitoring committee for the resolution plan’s implementation. If needed, they can appoint the resolution professional or someone else as its members. If the resolution professional is part of the monitoring committee, their monthly fee should not surpass what they received during the insolvency resolution process.
10. Continuation of resolution process until extension application: Clarification (Regulation 40)
The resolution professional will continue to discharge his responsibilities until the Adjudicating Authority decides on the application for extension.
IBBI is working tirelessly to strengthen the insolvency eco-system. So far, lot has been done and many more nuts and bolts will be tightened in future.
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In case you have any concern and queries or need any support in compliance/ IBC/NCLT cases, you may like to contact us.
Abhinarayan Mishra, FCA, FCS, IP, RV; KPAM & Associates, Chartered Accountants, Dwarka, New Delhi; +9910744992, [email protected]
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