Summary of Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024

The Insolvency and Bankruptcy Board of India (IBBI) recently issued amendments to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, effective from February 12, 2024. These amendments aim to streamline and enhance the liquidation process under the Insolvency and Bankruptcy Code (IBC), 2016. This Article talks about the recent amendments and an overview on IBBI and LIquidation process.

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Summary of Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024

The Insolvency and Bankruptcy Board of India (IBBI) recently issued amendments to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, effective from February 12, 2024. These amendments aim to streamline and enhance the liquidation process under the Insolvency and Bankruptcy Code (IBC), 2016. Here are the key points:

1. Reserve Price Adjustments:

Liquidators can reduce the reserve price of assets by up to 25% with Stakeholders’ Consultation Committee (SCC) approval, based on Corporate Insolvency Resolution Process (CIRP) valuations. For fresh valuations, the reduction can be up to 10% for subsequent auctions with SCC approval.

2. Private Sale Restrictions:

Private sales of corporate debtor assets require prior SCC consultation. The option for private sales above the reserve price of a failed auction has been removed.

3. SCC Meeting Frequency:

SCC meetings must occur at least every 30 days, with a minimum of one meeting per quarter. Liquidators must present comprehensive reports at these meetings, including progress, legal proceedings status, and cost details.

4. Valuation Reports:

Liquidators must arrange meetings where registered valuers explain their methodologies and deviations from CIRP valuations. Valuation reports must be shared with SCC members under confidentiality agreements.

5. Legal Proceedings and Going Concern:

Liquidators need SCC consultation before initiating or continuing legal proceedings and deciding on running the corporate debtor as a going concern. Failed auction strategies must be reviewed with SCC input.

6. Early Dissolution and Compliance:

Liquidators must seek SCC views before applying for early dissolution and provide detailed reports to the Adjudicating Authority (AA). Form H for compliance certificates has been modified to include additional realization and distribution details.

7. Corporate Liquidation Account:

Stakeholders can claim amounts from the Corporate Liquidation Account post-submission of the final report but pre-dissolution. Liquidators verify claims and request fund releases from the Board for distribution.

8. Compromise or Arrangement Proposals:

Such proposals, if recommended by the Committee of Creditors during CIRP, must be filed within thirty days of liquidation commencement.

9. Payment Period Extension:

Liquidators can extend the payment period for balance sale consideration beyond ninety days with SCC consultation.

10. Real Estate Assets:

Assets where possession has been given to allottees in real estate projects are excluded from the liquidation estate.

11. Reporting Modifications:

Assets where possession has been given to allottees in real estate projects are excluded from the liquidation estate.

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