On June 28, 2024, the Insolvency and Bankruptcy Board of India (IBBI) issued Circular No. IBBI/LIQ/73/2024, introducing new electronic forms to streamline the monitoring of liquidation processes under the Insolvency and Bankruptcy Code (IBC), 2016. This circular aims to enhance the efficiency and accuracy of reporting by Insolvency Professionals (IPs) handling liquidation cases, replacing the previously time-consuming and inefficient email-based reporting system.
1. Overview of the Circular:
The circular addresses the need for a more systematic and transparent approach to managing liquidation processes. It outlines the introduction of electronic forms designed to facilitate real-time reporting and record-keeping. These forms are expected to improve the efficiency of the liquidation process and ensure more accurate data submission.
2. Key Benefits of the New Electronic Forms:
- Efficiency Improvement: The electronic forms are designed to enhance the efficiency of the liquidation process by enabling IPs to submit data online, thereby reducing delays associated with traditional email submissions.
- Accuracy and Reliability: By minimizing manual errors and omissions, these forms aim to provide more accurate and reliable information regarding the liquidation process.
- Systematic Record-Keeping: The electronic platform will facilitate systematic and transparent record-keeping, which is crucial for compliance and oversight.
3. Details of the New Forms:
The circular specifies four key forms, each covering different stages of the liquidation process:
- Form LIQ 1: Covers the period from the commencement of liquidation till the public announcement. It includes details about the liquidator, the corporate debtor, and the liquidator’s fee. This form must be submitted on or before the 10th day of the month following the public announcement.
- Form LIQ 2: Pertains to the period from the public announcement to the progress report. It captures details of valuation, asset sales, litigations, and SCC meetings. Submission is due on or before the 10th day of the month after the progress report is submitted to the Adjudicating Authority (AA).
- Form LIQ 3: Covers the period from the last progress report to the application for dissolution. This includes unclaimed proceeds, sales, and distribution of proceeds. It is due on or before the 10th day of the month following the dissolution or closure application.
- Form LIQ 4: Includes details from the application for dissolution to the order for dissolution. This form, similar to Form LIQ 3, focuses on the final distribution of proceeds and must be submitted within 14 days of the dissolution order.
4. Filing and Compliance Requirements:
- Timely Filing: IPs are required to file the forms within the prescribed timelines. For ongoing cases, Forms LIQ 1 and LIQ 2 for the March 2024 quarter must be filed by September 30, 2024. For cases with dissolution applications or orders, all relevant forms (LIQ 1, LIQ 2, LIQ 3, and LIQ 4) must be filed by the same date.
- Access and Submission: The forms are available on the IBBI website. IPs will access the platform with unique credentials and are responsible for accurate and timely submissions, including affixing DSC or e-signing the forms.
- Non-Compliance Penalties: Failure to comply with the filing requirements, or submitting inaccurate or incomplete information, will result in penalties for the IPs.
Conclusion
By replacing inefficient email-based submissions with a more structured electronic reporting system, the IBBI aims to enhance the overall efficiency and accuracy of liquidation processes. Insolvency Professionals must adhere to the new filing requirements to ensure compliance and avoid penalties.
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Insolvency and Bankruptcy Board of India
7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001
Circular No. No. IBBI/LIQ/73/2024 Dated: 28th June, 2024
To
All Registered Insolvency Professionals
All Recognised Insolvency Professional Entities, and
All Registered Insolvency Professional Agencies
(By mail to registered email addresses and on the website of the IBBI)
Dear Madam / Sir,
Subject: Filing Forms to monitor liquidation processes under the Insolvency and Bankruptcy Code, 2016, and the regulations made thereunder.
During the liquidation process, the liquidator invites claims from stakeholders, forms a liquidation estate, endeavours to sell assets in consultation with the Stakeholders’ Consultation Committee (SCC) and distributes the realized proceeds to stakeholders as per the waterfall mechanism provided under section 53 of the Code.
2. The Insolvency Professional (IP), functioning as a liquidator, is also required to ensure compliance with legal requirements and reporting to the Adjudicating Authority (AA) and IBBI. Presently, the IPs submit the details regarding the liquidation process to the Board through emails, which is time-consuming and inefficient.
3. To ease the compliance burden for Insolvency Professionals (IPs), a set of electronic forms has been developed by the Board to capture the details of the liquidation process. These forms are crucial for the liquidation process under the Insolvency and Bankruptcy Code (IBC), as they facilitate systematic and transparent record-keeping and seamless reporting. The key benefits of these forms include:
- Enhancing the efficiency and effectiveness of the liquidation process.
- Allowing liquidators to easily access and submit forms online, reducing delays and improving efficiency.
- Minimizing the likelihood of errors and omissions, ensuring more accurate and reliable information.
4. An overview of these Forms is as per the Table below:
| Form No. | Period Covered and Scope | Timeline |
| LIQ 1 | From Commencement of Liquidation till Public Announcement: This includes details of the Liquidator, Corporate Debtor (CD), and the liquidator’s fee | On or before the 10th day of the subsequent month, after a public announcement has been made. |
| LIQ 2 | From Public Announcement till Progress Report: This includes details of valuation, sale, litigations, PUFE, SCC meetings, Receipts and Payments. | On or before the 10th day of the subsequent month, after submission of the Progress report to the AA |
| LIQ 3 | From last Progress Report to Application for Dissolution: This includes details of unclaimed proceeds, sale, litigations, PUFE, Realisation, distribution of proceeds, Receipts and Payments. (The details required in these forms are carried forward from the last Progress Report and hence need not be filled again) | On or before the 10th day of the subsequent month, after submission of the Dissolution /closure application to the AA. |
| LIQ 4 | From Application for Dissolution to Order for Dissolution: This includes details of, the distribution of proceeds, Receipts and Payments, etc. (The details required in these forms are carried forward from the last Progress Report and hence need not be filled again) | On or before the 14 days of passing of the order for dissolution of corporate debtor or closure of the liquidation process by the AA. |
5. The set of forms developed by the Board on an electronic platform has been hosted on its website at https://www.ibbi.gov.in. The IP handling the liquidation assignment shall access the platform with a unique username and password provided by the IBBI and upload/submit the Forms, along with relevant information and records, after affixing DSC or e-signing. Further, timely filing of complete and accurate information along with records is the sole responsibility of the IP.
6. It is directed that an IP shall file Forms through the electronic platform:
a. within the prescribed timeline for all cases where a liquidation order is passed on or after issuance of this circular.
b. for ongoing cases: Cases in which no application for dissolution of the corporate debtor/closure of the liquidation process has been filed, shall file form LIQ 1 and LIQ 2 (for the March 24 quarter) latest by 30th September 2024.
c. for cases where an application for dissolution of the corporate debtor/closure of the liquidation process has been filed with AA, shall file forms LIQ 1 and LIQ 2 (for the last quarter of the process), and LIQ 3 by 30th September 2024.
e. for cases where an order for closure of the liquidation process or dissolution of the corporation debtor has been ordered by AA, shall file forms LIQ 1 and LIQ 2 (for the last quarter of the process), LIQ 3, and LIQ 4 by 30th September 2024.
7. It is clarified that an IP who do not comply with applicable provisions of the Code and the Regulations made thereunder, shall be liable for:
(i) failure to file a Form along with relevant information and records,
(ii) inaccurate and incomplete information and/or records filed in or along with a Form.
8. This is issued in exercise of the powers under sub-section (1) of section 196 of the Insolvency and Bankruptcy Code, 2016.
Yours faithfully,
(Rajesh Tiwari)
General Manager
