IBBI Amends Insolvency and Bankruptcy Regulations, 2016
IBBI amends the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016
[Ministry
of Corporate Affairs Press Release dated 4 July 2018]
The Insolvency and Bankruptcy Board of India (IBBI) has notified
the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) (Third Amendment) Regulations, 2018 on 4 July.
2.
The following are salient amendments to the
regulations:
a. The
regulations provide that wherever the corporate debtor has classes of creditors
having at least ten creditors in the class, the interim resolution professional
shall offer a choice of three insolvency professionals in the public announcement
to act as the authorised representative of creditors in
each class. A creditor in a class may indicate its choice of an insolvency professional,
from amongst the three choices provided by the interim resolution professional,
to act as its authorised representative. The insolvency
professional, who is the choice of the highest number of creditors in the class,
shall be appointed as the authorised representative of
the creditors of the respective class.
b.
An application for withdrawal of an application admitted under section 7, 9 or 10
of the Code (for closure of corporate insolvency resolution process) may be submitted
to the interim resolution professional or the resolution professional, as the case
may be, before issue of invitation for expression of interest, along with a bank
guarantee towards estimated cost incurred for certain purposes under the process.
The committee of creditors (CoC) shall consider the application
within seven days of its constitution or seven days of receipt of the application,
whichever is later. If the application is approved by the CoC
with 90% voting share, the resolution professional shall submit the application
to the Adjudicating Authority on behalf of the applicant, within three days of such
approval.
c. Where
rate of interest has not been agreed to between the parties in case of creditors
in a class, the voting share of such a creditor shall be in proportion to the financial
debt that includes an interest at the rate of eight per cent per annum.
d. Where
the appointment of resolution professional is delayed, the interim resolution professional
shall perform the functions of the resolution professional from the fortieth day
of the insolvency commencement date till a resolution professional is appointed.
e. A
meeting of the CoC shall be called by giving not less
than five days’ notice in writing to every participant. The CoC
may, however, reduce the notice period from five days to such other period of not
less than forty-eight hours where there is any authorised
representative and to twenty-four hours in all other cases. The authorised representative shall circulate the agenda to creditors
in a class and announce the voting window at least twenty-four hours before the
window opens for voting instructions and keep the voting window open for at least
twelve hours.
f. The
resolution professional shall form an opinion whether the corporate debtor has been
subjected to certain transactions (preferential transactions, undervalued transactions,
extortionate transactions or fraudulent transactions) by 75th day and
make a determination of the same by 115th day of the insolvency commencement
date. Where the resolution profesional makes such a determination, he shall apply to the
Adjudicating Authority for appropriate relief before 135th day of the
insolvency commencement date.
g. The
resolution professional shall publish an invitation for expression of interest (EoI) by the 75th day from the insolvency commencement
date. The invitation shall specify the criteria, ineligibility, the last date for
submission of EoI and other details and shall not require
payment of non-refundable deposit. Any EoI received after
the specified time shall be rejected. The resolution professional shall conduct
due diligence based on material on record and issue a provisional list of prospective
resolution applicants within 10 days of the last date of submission of EoI. On considering objections to the provisional list, the
resolution professional shall issue the final list of prospective resolution applicants,
within 10 days of the last date for receipt of objections.
h. The
resolution professional shall issue the information memorandum, the evaluation matrix
and the request for resolution plans (RFRP), within five days of issue of the provisional
list to the prospective resolution applicants and allow at least 30 days for submission
of resolution plans. The RFRP shall detail each step in the process, and the manner
and purposes of interaction between the resolution professional and the prospective
resolution applicant, along with corresponding timelines. The resolution plan needs
to demonstrate that (a) it addresses the cause of default; (b) it is feasible and
viable; (c) it has provisions for its effective implementation; (d) it has provisions
for approvals required and the timeline for the same; and (e) the resolution applicant
has the capability to implement the resolution plan. The CoC
shall evaluate the resolution plan strictly as per the evaluation matrix to identify
the best resolution plan and may approve it with the required majority. If approved
by the CoC, the resolution professional shall endeavour to submit the resolution plan approved by the CoC to the Adjudicating Authority at least fifteen days before
the maximum period for completion of corporate insolvency resolution process, along
with a compliance certificate in the specified Form.
3. The regulations provide for a model timeline of the corporate
insolvency resolution process assuming that the interim resolution professional
is appointed on the date of commencement of the process and the time available is
hundred and eighty days, as under:
|
Section
/ Regulation |
Description
of Activity |
Norm |
Timeline |
|
Section
16(1) |
Commencement
of CIRP and appointment of IRP |
…. |
T |
|
Regulation
6(1) |
Public announcement
inviting claims |
Within 3
Days of Appointment of IRP |
T+3 |
|
Section
15(1)(c) / Regulations 6(2)(c) and 12 (1) |
Submission
of claims |
For 14 Days
from Appointment of IRP |
T+14 |
|
Regulation
12(2) |
Submission
of claims |
Up to 90th
day of commencement |
T+90 |
|
Regulation
13(1) |
Verification
of claims received under regulation 12(1) |
Within 7
days from the receipt of the claim |
T+21 |
|
Regulation
13(2) |
Verification
of claims received under regulation 12(2) |
|
T+97 |
|
Section
21(6A) (b) / Regulation 16A |
Application
for appointment of AR |
Within 2
days from verification of claims received under regulation 12(1) |
T+23 |
|
Regulation
17(1) |
Report certifying
constitution of CoC |
|
T+23 |
|
Section
22(1) / Regulation 19(1) |
1st
meeting of the CoC |
Within 7
days of the constitution of the CoC, but with seven
days’ notice |
T+30 |
|
Section
22(2) |
Resolution
to appoint RP by the CoC |
In the first
meeting of the CoC |
T+30 |
|
Section
16(5) |
Appointment
of RP |
On approval
by the AA |
…… |
|
Regulation
17(3) |
IRP performs
the functions of RP till the RP is appointed. |
If RP is
not appointed by 40th day of commencement |
T+40 |
|
Regulation
27 |
Appointment
of valuer |
Within 7
days of appointment of RP, but not later than 40th day of commencement |
T+47 |
|
Section
12(A) / Regulation 30A |
Submission
of application for withdrawal of application admitted |
Before issue
of EoI |
W |
|
|
CoC to dispose
of the application |
Within 7
days of its receipt or 7 days of constitution of CoC,
whichever is later. |
W+7 |
|
|
Filing application
of withdrawal, if approved by CoC with 90% majority
voting, by RP to AA |
Within 3
days of approval by CoC |
W+10 |
|
Regulation
35A |
RP to form
an opinion on preferential and other transactions |
Within 75
days of the commencement |
T+75 |
|
|
RP to make
a determination on preferential and other transactions |
Within 115
days of commencement |
T+115 |
|
|
RP to file
applications to AA for appropriate relief |
Within 135
days of commencement |
T+135 |
|
Regulation
36 (1) |
Submission
of IM to CoC |
Within 2
weeks of appointment of RP, but not later than 54th day of commencement |
T+54 |
|
Regulation
36A |
Publish
Form G |
Within 75
days of commencement |
T+75 |
|
|
Invitation
of EoI |
|
|
|
|
Submission
of EoI |
At least
15 days from issue of EoI (Assume 15 days) |
T+90 |
|
|
Provisional
List of RAs by RP |
Within 10
days from the last day of receipt of EoI |
T+100 |
|
|
Submission
of objections to provisional list |
For 5 days
from the date of provisional list |
T+105 |
|
|
Final List
of RAs by RP |
Within 10
days of the receipt of objections |
T+115 |
|
Regulation
36B |
Issue of
RFRP, including Evaluation Matrix and IM |
Within 5
days of the issue of the provisional list |
T+105 |
|
|
Receipt
of Resolution Plans |
At least
30 days from issue of RFRP (Assume 30 days) |
T+135 |
|
Regulation
39(4) |
Submission
of CoC approved Resolution Plan to AA |
As soon
as approved by the CoC |
T+165 |
|
Section
31(1) |
Approval
of resolution plan by AA |
|
T=180 |
AA: Adjudicating Authority; AR: Authorised Representative; CIRP: Corporate Insolvency
Resolution Process; CoC: Committee of Creditors;
EoI: Expression of Interest; IM: Information
Memorandum; IRP: Interim Resolution Professional; RA: Resolution Applicant;
RP: Resolution Professional; RFRP: Request for Resolution Plan.