Insolvency and Bankruptcy Board of India (IBBI) has issued amendments to the Liquidation Process Regulations, 2016, through a notification dated January 28, 2025. Key changes include the inclusion of compromise or arrangement under Section 230 of the Companies Act, 2013, as an alternative to selling a corporate debtor as a going concern. The amendments mandate liquidators to file prescribed forms electronically with the IBBI, specifying strict timelines and penalties for delays. Additionally, a Corporate Liquidation Account is to be maintained with a scheduled bank. The regulations now require bidders to submit an undertaking affirming their eligibility under Section 29A of the Insolvency and Bankruptcy Code, with provisions for forfeiting deposits if found ineligible. Liquidators must conduct due diligence on the highest bidder within three days and consult a committee before declaring a successful bidder. Amendments also refine auction processes, bidder eligibility verification, and unclaimed dividend reporting.
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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
NOTIFICATION
New Delhi, the 28th January, 2025
Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2025.
F. No. IBBI/2024-25/GN/REG121.—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 to further 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) (Amendment) Regulations, 2025.
(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 45, in sub-regulation (3), in clause (a), after the words “sold as a going concern”, the following shall be inserted, namely: –
“or a compromise or arrangement has been sanctioned under section 230 of the Companies Act, 2013”
3. In the principal regulations, in regulation 46, for sub-regulation (1), the following sub-regulation shall be substituted, namely:-
“(1) The Board shall maintain and operate an account to be called the Corporate Liquidation Account with a scheduled bank.”
4. In the principal regulations, after regulation 47A, the following regulation shall be inserted, namely: –
“ Filing of Forms.
(1) The liquidator shall file the Forms, along with the enclosures thereto, on an electronic platform of the Board, as per the timelines stipulated against each Form, as per the Table below: –
TABLE
| Form No. |
Period Covered and Scope | Timeline |
| LIQ 1 | From liquidation commencement date till public announcement: This includes details of the liquidator, corporate debtor, the liquidator’s fee, etc. | 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, avoidance of transactions, meetings of consultation committee, receipts and payments, etc. | On or before the 10th day of the subsequent month, after submission of each Progress Report to the Adjudicating Authority. |
| LIQ 3 | From final report to application for dissolution: This includes details of unclaimed proceeds, sale, litigations, avoidance transactions, realisation, distribution of proceeds, receipts and payments, etc. |
On or before the 10th day of the subsequent month, after submission of the dissolution /closure application to the Adjudicating Authority. |
| LIQ 4 | From application for dissolution to order of dissolution: This includes details of the distribution of proceeds, receipts and payments, etc. | On or before the 14th day of passing of the order for dissolution of corporate debtor or closure of the liquidation process by the Adjudicating Authority. |
(2) The liquidator shall ensure that the Forms and its enclosures filed under this regulation are accurate and complete.
(3) The filing of a Form under this regulation after the due date of submission, whether by correction, updation or otherwise, shall be accompanied by a fee of five hundred rupees per Form for each calendar month of delay after the date notified by the Board.
(4) The liquidator shall be liable to any action which the Board may take as deemed fit under the Code or any regulation made thereunder, including refusal to issue or renew Authorisation for Assignment, for –
(i) failure to file a Form along with requisite information and records;
(ii) inaccurate or incomplete information or records filed in or along with a Form;
(iii) delay in filing the Form.”
5. In the principal regulations, in Schedule I, in para (1),
(i) Clause (1D) shall be omitted.
(ii) for clause (1E), the following clause shall be substituted, namely:-
“(1E) The liquidator shall provide to the prospective bidder, access of the assets under auction to facilitate their inspection and due diligence.”
(iii) after clause (5), the following clause shall be inserted, namely:-
“(5A) The public notice shall state that prospective bidders shall submit an undertaking that they do not suffer from any ineligibility under section 29A of the Code to the extent applicable and that if found ineligible at any stage, the earnest money deposited shall be forfeited.”
(iv) after clause (12), the following clauses shall be inserted, namely:-
“(12A) Within three days of declaring the highest bidder, the liquidator shall conduct due diligence and verify the eligibility of the highest bidder.
(12B) The liquidator shall present the auction results, details of highest bidder, and the due diligence conducted on it to the consultation committee under regulation 31A.
(12C) The liquidator shall declare the highest bidder as the successful bidder or reject such bid, after consultation with the consultation committee under regulation 31A.
(12E) If a bidder is found ineligible, the earnest money deposited by him shall be forfeited.
(12E) In case the highest bidder is found ineligible, the liquidator may, in consultation with the consultation committee, declare the next highest bidder as the successful bidder after following the same process as provided under clause (12A) to clause (12E).”
6. In the principal regulations, in Schedule II, in Form I, for table B, the following table shall be substituted, namely:-
“B. Details of Stakeholders entitled to Unclaimed Dividends or Undistributed Proceeds
Sl. No. |
Name of stakeholder entitled to
|
Address, phone number and email address of the stakeholder |
Identification Number of the stakeholder (PAN, CIN, etc.)
|
Amount due to the stakeholder (Rs.) |
Nature of Amount due |
Applicable section of the Income Tax Act, 1961 or
|
Amount of tax to be deducte d (Rs.) |
Reason for unclaimed dividends or undistributed proceeds |
Remarks |
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
(10) |
1 |
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2 |
RAVI MITAL, Chairperson
[ADVT.-III/4/Exty./939/2024-25]
Note:—The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 were published vide notification No. IBBI/2016-17/GN/REG005 dated 15th December, 2016 in the Gazette of India, Extraordinary, Part III, Section 4, vide No. 460 on 15th December, 2016 and were last amended by Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024 vide notification No. IBBI/2023-24/GN/REG112 dated the 12th February, 2024 in the Gazette of India, Extraordinary, Part III, Section 4, vide No. 95 on 12th February, 2024.
