Insolvency and Bankruptcy Board of India

No. IBBI/PR/2021/24 | 30th September, 2021

Press Release

Insolvency and Bankruptcy Board of India amends the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2021 today.

2. The liquidator has been empowered with greater autonomy during liquidation process, comparable to the resolution professional during CIRP. The participation of stakeholders is not much elaborated in the Code. The liquidation regulations provide for a consultation committee known as stakeholders’ consultation committee (SCC), which has representation from secured financial creditors, unsecured financial creditors, workmen and employees, government, other operational creditors, and shareholder/partners to advice the liquidator on matters relating to sale. Though the advice of this committee is not binding on the liquidator, consultation process on important issues, addresses the issue related to information asymmetry and therefore ensures an effective participation of stakeholders. The amendment expands the scope of consultation to cover all aspects related to sale of assets and appointment of professionals. The amendment regulations also provide for manner of selection of representatives of stakeholders in SCC.

3. The participation of large number of buyers in the process is key to better realization of value for the stakeholders. Keeping this in view the amendment regulations provide that Liquidator shall not require payment of any non-refundable deposit or fee for participation in an auction. It also provides that the earnest money deposit shall not exceed ten percent of the reserve price in an auction. Also, with a view to improve visibility for the liquidation assets, the Board has made available an electronic platform at www.ibbi.gov.in for hosting public notices of auctions of liquidation assets of ongoing liquidation processes.

4. Further, to enhance the transparency and accountability, the amendment regulations provide for the Liquidator to intimate the reasons for rejection of the highest bid to the highest bidder and report the same in the next progress report.

5. The amendment regulations are effective from today. These are available at mca.gov.in and www.ibbi.gov.in.

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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

NOTIFICATION

New Delhi, the 30th September, 2021

Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2021

No. IBBI/2021-22/GN/REG079.- In exercise of the powers conferred by clause (t) of sub-section (1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations further to amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, namely: –

1. (1) These Regulations may be called the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2021.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereinafter referred to as the principal regulations), in regulation 2, in sub-regulation (1), in clause (ea), in sub-clause (vii), the words “to contributories” shall be omitted.

3. In the principal regulations, in regulation 2B, in sub-regulation (1), the words, figures and brackets “sub-sections (1) and (4) of” shall be omitted.

4. In the principal regulations, in regulation 15, in sub-regulation (2), in clause (e), for the words and figures “in accordance with Chapter III of Part II”, the words and figure “under Part II” shall be substituted.

5. In the principal regulations, in regulation 31A

(i) for sub-regulation (1), the following sub-regulation shall be substituted, namely:-

“(1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on matters relating to-

(a) appointment of professionals and their remuneration under regulation 7;

(b) sale under regulation 32, including manner of sale, pre-bid qualifications, reserve price, amount of earnest money deposit, and marketing strategy:

Provided that the decision(s) taken by the liquidator prior to the constitution of consultation committee shall be placed before the consultation committee for information in its first meeting.”;

(ii) for sub-regulation (4), the following sub-regulation shall be substituted, namely:-

“(4) If the stakeholders of any class fail to nominate their representatives, under sub-regulation (3), such representatives shall be selected by a majority of voting share of the class, present and voting.”;

(iii) in sub-regulation (10), in the proviso, after the words “in writing”, the words “and mention it in the next progress report” shall be inserted.

6. In the principal regulations, in regulation 44, in sub-regulation (1), the words “Chapter III of” shall be omitted.

7. In the principal regulations, in regulation 47, in the table relating to model timelines for liquidation process, in column (3), against Sl. No. 9, the words “and announcement to public” shall be omitted.

8. In the principal regulations, in Schedule I, in paragraph 1-

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