IBBI’s 2024 Amendments for a Smoother Liquidation Journey

The Insolvency and Bankruptcy Board of India (IBBI) is an independent regulatory body established by the Insolvency and Bankruptcy Code (IBC), 2016. It is responsible for overseeing and regulating insolvency proceedings in India, including corporate insolvency resolution, individual bankruptcy, and voluntary liquidation.

To enhance transparency, accountability, and efficiency in the voluntary liquidation process, the IBBI notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2024. These amendments came into effect on 31-January-2024.

Let us take a closer look at the new rules the IBBI put in place and see how they will help the stakeholders and make the whole insolvency process in India work better.

Additional Disclosures:

The following additional disclosures needs to be made by directors of the corporate person who are proposed to liquidate the corporate person.

• Pending proceedings or assessments before statutory authorities and pending litigations.
• Whether sufficient provision has been made to meet the likely obligations arising, if any, on account of the pending proceedings.

Reduced Timelines for call a meeting of the contributories of the corporate person:

If the liquidator fails to liquidate the corporate person within stipulated period of 90 days or 270 days as the case may be, he shall hold a meeting of contributories of the corporate person and present a status report within fifteen days from the end of such period and thereafter at the end of every such succeeding period.

Liquidator shall mention the reasons for not completing the process within the stipulated time and communicate the additional time required for completing the process.

Stake holder claims Post-Final Report Period:

After the final report submission and before the company is dissolved, stakeholders can claim funds from the Corporate Voluntary Liquidation Account by applying to the liquidator. The liquidator will check these claims and ask the Board to release the funds for distribution.

These amendments aim to enhance transparency through additional disclosures, reduce timelines to speed up the process, and provide flexibility to stakeholders to claim entitlements even after the final report is submitted. They mark a significant step forward in ensuring a smoother and more streamlined liquidation process for businesses in India.