In order to streamline the voluntary liquidation process of stressed firms, the Insolvency and Bankruptcy Board of India (IBBI) has amended the IBBI (Voluntary Liquidation Process) Regulations, 2017 and will be called the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2022.
- This amendment was made by IBBI 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 information for the same was provided through a notification by IBBI on April 5, 2022. Click here to Read
Need behind this Amendment:
i.To make the firm’s exit process quicker and more efficient so that the idle assets are released expeditiously for more productive uses without substantial value erosion.
ii.According to the discussion paper released in February 2022, the liquidators had submitted final reports to the National Company Law Tribunal (NCLT) in 546 cases as of December 31, 2021. However, as many as 263 cases (around 48%) were still pending for dissolution.
- Now this amendment will save judicial time and resources and thus, reduce the burden on the NCLT as well.
Key Amendments:
i.The period for the distribution of liquidation proceeds reduced to 30 days from the current six months.
ii.In cases where claims are received from creditors, the liquidator has to complete the liquidation process and submit the final report with the board and the Registrar of Companies in 270 days from the date of start of the process.
- However, in cases where no claims are received from any creditor, this process has to be completed in 90 days.
iii.The period for the preparation of list of stakeholders by the liquidator will be reduced to 15 days from the proposed last date for the receipt of claims, in cases where no claims are received from the creditor.
iv.IBBI has also introduced a compliance certificate in Form-H for the voluntary liquidation process, along the lines of the one provided under the CIRP (Corporate Insolvency Resolution Process) currently.
- It has to be submitted along with the final report to the adjudicating authority.
- Form-H Compliance Certificate is under Regulation 38(3) of the IBBI (Voluntary Liquidation Process) Regulations, 2017.
v.There is substitution of the word ‘Corporate Debtor’ with ‘Corporate Person’.
Recent Related News:
In January 2022, the Securities and Exchange Board of India (SEBI) amended the SEBI (Settlement Proceedings) Regulations, 2018, called the SEBI (Settlement Proceedings) (Amendment) Regulations, 2022 and has reduced the timeline for filing settlement applications to just 60 days from the current 180 days to make the system more efficient.
About Insolvency and Bankruptcy Board of India (IBBI):
It is a key institution in implementing the Insolvency and Bankruptcy Code (IBC).
Establishment– 2016
Chairperson– Ravi Mittal
Headquarters– New Delhi, Delhi
