IBBI proposes amendments to insolvency rules; seeks public comments

IBBI proposes amendments to insolvency rules; seeks public comments

The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to the insolvency resolution process for Corporate Process Regulations to enhance efficiency and reduce costs and has sought suggestions from stakeholders by July 10.

These amendments are expected to enhance the efficiency and transparency of the Corporate Insolvency Resolution Process (CIRP) and benefit lenders and other stakeholders involved in CIRP.

discussion papers

In a discussion paper released on Wednesday, the IBBI proposed that the registered valuer should submit a comprehensive valuation report for the entire corporate debtor, instead of separate valuations for different asset classes.

The proposal aims to eliminate inconsistencies between the CIRP Regulations and the Companies (Registered Valuers and Valuation) Rules.

For companies with assets up to Rs 1,000 crore and micro, small and medium enterprises (MSMEs), the board proposes to appoint only one registered valuer to provide estimates of fair value and liquidation value.

However, keeping in view the complexities involved, if the committee of creditors decides to have two evaluators, it shall record the reasons for the same before the resolution professional (RP) takes steps for such appointments, IBBI said.

This measure will reduce CIRP costs and speed up the process for smaller entities.

Comments are being sought

IBBI, a statutory body functioning under the Ministry of Corporate Affairs, has invited stakeholders, including corporate debtors, creditors, insolvency professionals and the general public, to submit their comments on the proposed amendments by July 10.

To prevent delays in the appointment of authorised representatives (ARs) for creditors, the IBBI also proposed to allow the interim resolution professional to enable the AR to attend meetings of the committee of creditors after the application for their appointment was submitted to the adjudicating authority.

The discussion paper also discussed the issue of release of guarantees in the resolution plan, with the Board proposing that such a proposal submitted by the applicant would not preclude the rights of creditors to initiate proceedings against the guarantors and enforce recovery of guarantees governed through various agreements.

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