IBBI Insolvency Resolution Process 2023 Amendments w.e.f. 18.09.2023

Analysis of IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023

IBBI vide Notification no IBBI/2023-24/GN/REG106 dated 18^th Sept 2023 has brought many changes in the Corporate Insolvency Resolutions Process (CIRP) in line with Public Comments asked as on 18^th Jan 2023. These are briefly analysed as follows: –

1. These amendments are effective from 18.09.2023

2. New Regulation 2D is introduced which prescribes filing of evidence related to debt like a chronology of the debt and default including the date when the debt became due, date of default, dates of part payments, if any, date of last acknowledgement of debt and the limitation applicable in each Sec 7 or 9 application to AA.

3. New Regulation 3A introduced with the heading `Providing of assistance and cooperation by the personnel of the corporate debtor has the following features: –

• IRP/RP shall take custody and control from concerned personnel including promoters of CD all records of information relating to the assets, finances, and operations as prescribed u/s 18 (a) & Regulation 36 wrt IM.
• They will provide a list of whose possessions these assets are.
• If no list is provided by them, IRP/RP shall himself prepare the list. After taking control of all these IRP/RP shall identify in whose custody and control such assets shall be held if required.
• The list shall be signed by both parties along with 2 witnesses.
• IRP/RP shall requisition information not provided relating to the assets, finances and operations of the corporate debtor from concerned personnel including promoters of CD.
• IRP/RP shall requisition assets recorded in the Balance Sheet or IU or Depository or any other registry whose custody is not handed over by the concerned personnel including promoters of CD
• 19(2) applications must include failure to prove any such asset or record

4. Regulation 12 (1) substituted to provide for the increase in claim submission up to the date of issue of RFRP with providing reasoning of delay. Earlier it was 90 days.

5. New Regulation 13 (1A) inserted to provide as follows: –

• IRP/RP to provide reasons if the claim is not collated after verification (1A)
• IRP/RP to categorise all claims as acceptable or non-acceptable for all claims received after 90 days but before 7 days of the meeting of Creditors for resolution plan or the initiation of liquidation (1B).
• IRP/RP shall intimate to Creditor within 7 days for non-acceptance (1C)
• Shall submit before AA for condonation for delay and adjudication as applicable.
• New Regulation 16 A (3A) is introduced whereas AR can be replaced on requisition by 10 % of the financial creditor of that class of their choice AR by asking IRP/RP as per the following procedure: –
• IRP/RP shall then offer to select out of 3 including as suggested above (3B).
• RP then shall apply to AA for the selection of who receives maximum votes(3C).
• AR fees increased to 30-50’000 against existing fees of 20’000 based on no of creditors being 10-100 (30,000)/ 101-1000 (40,000)/More than 10001(50,000) (Reg 8 a)

• AR is also now entitled for fees for meeting with Class of Creditors being 10-100 (10,000)/ 101-1000 (12,000)/More than 10001(15,000) (Reg 8 b)
• 2 meetings shall be CIRP cost wrt a COC meeting (Reg 8 c)
• More than 2 meetings, it shall be CIRP cost if approved by COC (Reg 8 d)
• New Sub Regulation 16(A) 10 inserted which has substantially increased the duties of AR as follows: –

1. Understanding the discussions and considerations of the committee meetings and facilitating informed decision-making;

2. Review the contents of minutes prepared by the resolution professional and provide his comments to the resolution professional, if any;

3. Help during the consultations made by the resolution professional to prepare a strategy for marketing of the assets of the corporate debtor in terms of sub-regulation (1) of regulation 36C;

4. Work in collaboration to enhance the marketability of the assets of the corporate debtor in terms of sub-regulation (3) of regulation 36C;

5. Evaluate the resolution plans submitted by resolution applicants;

6. Ensure that they have access to any information or documents required to form an opinion on issues discussed in the committee meetings;

7. Update regularly on the progress of the corporate insolvency resolution process;

8. Make suggestions for modifications of the resolution plan

9. Record proceedings and prepare the minutes of the meeting

10. Act as a representative before the Adjudicating Authority, National Company Law Appellate Tribunal, and other regulatory authorities.

6. Regulation 28(1) is substituted to provide that on assignment, both parties shall provide terms of assignment and identity of assignee or transferee within 7 days to IRP/RP

7. New Regulation 30B is inserted to provide for the Audit of Corporate Debtor as follows: –

• Any member of COC may propose an audit of the corporate debtor along with the objectives, scope, estimate of the costs, timeframe and name(s) of the proposed auditor(s).
• An audit shall be conducted if the proposal is approved
• The audit shall be conducted by an insolvency professional having the qualifications required for such audit.
• The auditor shall prepare a report detailing his findings and the same shall be presented before the committee along with the comments of the IRP or RP as the case may be.
• The expenses of such audit shall be treated as IRP costs.

8. Sub-Regulation 1 is substituted against Regulation 36B to provide as follows: –

• RP shall provide IM EM & RFRP to every resolution applicant in the final list: Further, a proviso is added which states that these may also be provided to each applicant in the provisional list as available.

9. The scope of Timeline for Regulation 36 B has been increased as stated in Regulation 40A to further provide as follows: –

• Issue of RFRP, including Evaluation Matrix and IM within T+105
• Receipt of Resolution Plans within T+135

10. The Scope of filing of forms as per Regulation 40B (1A) for stated activities not carried out than CIRP-7 shall be filed for 30/60/90^th day till such activity is not complete.

New Form G is substituted incorporating changes as stated in point no 10 above and the date of submission of the Resolution Plan.