Category Archives: insolvency law

list of stakeholders

IBBI has vide its circular dated 24th November, 2021 decided to remove sensitive personal information such as aadhar no. from the details filed by the insolvency professionals of the list of stakeholders in a liquidation process.

Good to see at least one regulator taking pro-active measure to secure the privacy of individuals as aadhar no. being displayed in public domain is a serious breach of privacy and could lead to serious cyber crimes against the said individuals.

The salient features of the said circular is given below:

In pursuance of clause (d) of sub-regulation (5) of regulation 31 of the IBBI (Liquidation Process) Regulations, 2016 (‘Liquidation Process Regulations’) requiring the liquidator to file list of stakeholders on the electronic platform of the Board for dissemination on its website, the Board had issued the Circular No. IBBI/LIQ/40/2021 dated 04th March 2021 directing the liquidators to file the list of stakeholders and modification thereof, in the stipulated format, on the electronic platform, http://www.ibbi.gov.in.

  1. In the said format, the particular / column “Identification No.” for seeking identification details of stakeholders is mentioned. It has come to notice that in few instances, the details such as Aadhaar, PAN card, etc., are being filled therein. Such information being sensitive personal information is prone to misuse and not to be revealed on public platforms. The ‘General Guidelines for securing Identity information and Sensitive personal data or information in compliance to Aadhaar Act, 2016 and Information Technology Act, 2000’ issued by Ministry of Electronics and Information Technology provides that any personal identifiable data including Aadhaar should not be published in public domain.
  2. To address this problem, this Circular in partial modification of the Circular under reference, removes the column “Identification No.” from the particulars of the format stipulated therein. The insolvency professionals are directed to file the list of stakeholders of the respective corporate debtor under liquidation and modification thereof, in the revised format placed in Annexure, within three days of the preparation of the list or modification thereof, as the case may be. The rest of the contents of the above said Circular shall remain same.

Leave a comment

Filed under insolvency law

liquidation process

Insolvency and Bankruptcy Board of India (IBBI) has vide its circular dated 15th November, 2021 clarified that it is not necessary for Insolvency Professionals to expressly seek the No Objection Certificate or No Dues Certificate from Income Tax Department while the Voluntary Liquidation Process is going on.

It unnecessarily delays the process and defeats the very purpose of the Bankruptcy Code which is timely resolution of bankruptcies and liquidations. Every creditor is given a 30 day window in which to submit their claims to the Insolvency Professional and they i.e. the Income Tax office/ department stand in the same footing as the other creditors so there is ostensibly no need for special treatment to the revenue office.

Copy of the circular can be found here

Leave a comment

Filed under insolvency law

monetary penalties on insolvency professionals

IBBI has vide their circular dated 28th July, 2021 standardised the monetary penalties to be levied on insolvency professionals for various violations or breaches carried out them. The salient features are given below.

This comes into force with immediate effect.

Leave a comment

Filed under insolvency law

insolvency professional agency

IBBI has vide its notification dated 27th April, 2021 amended the IBBI (Model Bye Laws and Governing Board of Insolvency Professional Agencies), Regulations as under:

Regulation 12A pertains to authorisation for assignment wherein the insolvency professional agency may on application by its professional member issue or renew its authorisation for assigment.

Sub Clause 5 says that if the authorisation for assignment is not issued, renewed or rejected by the Agency within 15 days of the date of receipt of the application by the agency, it is deemed that such authorisation is issued or renewed, as the case may be.

In view of the covid pandemic, this period of 15 days is extended to 30 days upto 31st October, 2021

Sub Clause 7 says that an order of rejection is passed, the aggrieved applicant may make an appeal to the Membership Committee within 7 days of the date of the order. This period of 7 days is extended to 15 days upto 31st October, 2021.

Copy of the notification can be found at the IBBI site. viz. http://www.ibbi.gov.in

Leave a comment

Filed under insolvency law

insolvency professionals

IBBI has vide its notification dated 27th April, 2021 amended the IBBI (Insolvency Professionals) Regulations 2016 as under:

  1. For the financial year 2020-21 and insolvency professional can pay his professional to IBBI by 30th June, 2021. Earlier it was to be paid by 30th April, 2021;
  2. When an individual resigns or joins an insolvency professional entity as a director or partner then the entity is now required to inform IBBI of the same within 30 days of such appointment/ resignation. Earlier the period was 7 days.
  3. The time limit for an insolvency professional entity to pay its annual fee to the Board for the financial year 2020-21 is 30th June, 2021, earlier it was 30th April, 2021.

These relaxations have been given in view of the ongoing covid pandemic raging through the country.

Leave a comment

Filed under insolvency law

committee of creditors

IBBI circular dated 16th April, 2021 on the subject of matters to be considered by the committee of creditors on request by members of the committee. Read on.

Regulation 18 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations,
2016 (CIRP Regulations) provides that a resolution professional (RP) may convene a meeting
of the committee of creditors (CoC), when he considers it necessary. He shall, however,
convene a meeting of the CoC, if a request to that effect is made by members of the CoC
representing 33% of the voting rights.

  1. Regulation 19 of the CIRP Regulations requires a notice in writing for calling a meeting of
    the CoC. Regulation 21 requires that the notice for a meeting of the CoC shall contain a list of
    matters to be discussed, the list of issues to be voted, and copies of all documents relevant to
    the matters to be discussed and issues to be voted upon at the meeting.
  2. It is clear from a joint reading of the provisions of regulations 18, 19 and 21 of the CIRP
    Regulations that members of the CoC having 33% of the voting rights may request the RP to
    convene a meeting of the CoC. Such request shall include a note proposing the matters to be
    discussed or issues to be voted upon, along with relevant documents, if any. On receipt of the
    request, the RP shall convene a meeting of the CoC for consideration of the note. These
    provisions envisage the following situations:

Leave a comment

Filed under insolvency law

liquidation process

IBBI has vide its notification dated 4th March, 2021 amended the IBBI (Liquidation Process) Regulations, 2016 as follows:

Regulation 31 which pertains to list of stakeholders has been amended as follows:

Sub-regulation 2 has been substituted as follows:

“(2) The liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of the claims.”

The earlier clause read as follows:

(2) The liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of claims, and the filing of the list shall be announced to the public in the manner specified in Regulation 12(3).

The portion marked in bold has been deleted from the regulations.

New clause (d) has been inserted in sub- regulation (5) as follows:

“(d) filed on the electronic platform of the Board for dissemination on its website:
Provided that this clause shall apply to every liquidation process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021.”;

Sub regulation (5) pertains to list of stakeholders, which shall be available for inspection for person who submitted proofs of claim, by members, partners, directors & guarantors of corporate debtor and to be displayed on the website of the corporate debtor.

Now this additional clause (d) has been added to the said sub-regulation (5) of regulation 31

Leave a comment

Filed under insolvency law

insolvency process of personal guarantor

IBBI has issued a circular dated 2nd February, 2021 wherein they have made an online process for submitting application for initiation of insolvency resolution process of a personal guarantor to a corporate debtor. This application is filed under section 94(1) or 95(1) of the Insolvency and Bankruptcy Code 2016.

On making an application online, the applicant shall get an acknowledgement.

This is one more step of making all applications online by the government.

The application can be made online at this site i.e.

https://ibbi.gov.in/intimation-applications/iaaa-personal-one

Leave a comment

Filed under insolvency law

retention of records – corporate insolvency

The IBBI has issued a circular dated 4th January, 2021 wherein they have mandated the resolution professionals to retain all their records pertaining to the Corporation Insolvency Resolution Process for a minimum period of 8 years in electronic format and 3 years in physical form. Hitherto he was required to retain all records only for 3 years in physical form. Gist of circular follows.

The Insolvency and Bankruptcy Code, 2016 (Code) read with various Regulations require an insolvency professional (IP) to maintain several records in relation to the assignments conducted by him under the Code. Keeping in view the importance of such records, clause (g) of sub-regulation (2) of regulation 7 of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) provides that the registration granted to an IP shall be subject to the condition that he maintains records of all assignments undertaken by him under the Code for at least three years from the completion of such assignment. Clause 19 of the Code of Conduct appended to the First Schedule to the IP Regulations mandates an IP must provide all records as may be
required by the Board or the insolvency professional agency (IPA) with which he is enrolled.

  1. Clause (a) of sub-regulation (4) of regulation 3 of the IBBI (Inspection and Investigation) Regulations, 2017 (Inspection Regulations) provides that the Board shall conduct inspection, inter alia, to ensure that the records are being maintained by an IP in the manner required under the relevant regulations. Sub-regulation (2) of regulations 4 and sub-regulation (2) of regulation 8 of the (Inspection Regulations) empower the Inspecting Authority / Investigating Authority to direct the IP to submit records, as may be required, and it is his duty to produce such records in his custody or control before such Authority.
  2. Regulation 39A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) mandates the interim resolution professional (IRP) and the resolution professional (RP) to preserve a physical as well as an electronic copy of the records relating to the corporate insolvency resolution process (CIRP) of the corporate debtor (CD), as per the record retention schedule as communicated by the Board in consultation with IPAs.
  3. Keeping with the above, the Board, in consultation with the IPAs and IPs, directs as under:
    (i) An IP shall preserve copies of records generated in electronic form for a minimum period of eight years, from the date of completion of the CIRP or the conclusion of any proceeding relating to CIRP, before the Adjudicating Authority (AA), Appellate Authority or Court, or any matter pending with the Board, whichever is later.
    (ii) For records other than (i) above, the IP shall maintain copies for minimum period of three years in physical form, and for minimum period of eight years in electronic form, from the date of completion of the CIRP or the conclusion of any proceeding relating to CIRP, before the Adjudicating Authority (AA), Appellate Authority or Court, or any matter pending with the Board, whichever is later.
    (iii) An IP shall preserve the records at a secure place and ensure that unauthorised persons do not have access to the same. For example, he may store copies of records in electronic form with an Information Utility. Notwithstanding the place and manner of storage, the IP shall be under obligation to produce records as may be required under the Code and the Regulations.
    (iv) An IP shall preserve records relating to that period of a CIRP which he has handled, irrespective of the fact that he did not continue the assignment till its conclusion. For example, an IP served for three months as RP before he was replaced by another IP, who served till conclusion of the CIRP. The former shall preserve records relating to the first three months, and the latter shall preserve records relating to the balance period of the CIRP.
    (v) An IP, in the matter of a CIRP, shall preserve the following copies of records relating to/forming basis for:
    (a) his appointment as IRP or RP, including the terms of appointment;
    (b) handing over / taking over by him;
    (c) admission of CD into CIRP;
    (d) public announcement;
    (e) the constitution of CoC and CoC meetings;
    (f) claims, verification of claims, and list of creditors;
    (g) engagement of professionals, registered valuers, and insolvency professional entity, including work done, reports etc., submitted by them;
    (h) information memorandum;
    (i) all filings with the AA, Appellate Authority and their orders;
    (j) invitation, consideration and approval of resolution plan;
    (k) statutory filings with IBBI and IPA;
    (l) correspondence during the CIRP;
    (m)insolvency resolution process cost pertaining to CIRP;
    (n) avoidance transactions or fraudulent trading; and
    (o) any other records, which is required to give a complete account of the CIRP.

Leave a comment

Filed under insolvency law

list of creditors – insolvency

IBBI has vide its circular dated 27th November, 2020 created an online website for the list of creditors to be uploaded on it for the benefit of the stakeholders. Interim Resolution Professionals or Resolution Professionals have anyways to update the list and submit it to the Adjudication Authority and upload it on the website of the corporate debtor. Now vide this mechanism, the list of creditors will be made available on a public website for perusal by the stakeholders.

This requirement is applicable to every corporate insolvency resolution process ongoing as on 13th November, 2020. The format of list of creditors is given in the Annexure to the said circular.

This has been bought about vide an amendment to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016.

For more details you can click on the following link

https://www.ibbi.gov.in/

Leave a comment

Filed under insolvency law

registered valuers

IBBI circular dated 9th October, 2020 on the subject of meetings of disciplinary committee and appellate panel of the registered valuers organisation.

The Registered Valuers Organisations (RVOs) act as front line regulators under the Companies (Registered Valuers and Valuation) Rules, 2017. They provide the institutional arrangement for oversight, including the development and regulation of the registered valuers (RV). They grant
membership to valuers, who comply with the eligibility requirements as provided in the Rules, conduct the educational courses in valuation and provide the training to the individual members.

  1. Clause 8 (d) of Model Bye laws forming part of the Companies (Registered Valuers and Valuation) Rules, 2017 provides that the Governing Board of the RVO shall constitute one or more Disciplinary Committee (DCs) consisting of at least one member nominated by the authority.
  2. Further, Clause 25 (1) of Model Bye-Laws forming part of the Companies (Registered Valuers and Valuation) Rules, 2017 provides that the Governing Board shall constitute an Appellate Panel (AP) consisting of one independent director of the Organisation, one member each from amongst the persons of eminence having experience in the field of law and field of valuation, and one member nominated by the authority.
  3. It has been observed that the RVOs have been following different practices in conducting the meetings of the DC and AP. Accordingly, the Board advises the RVOs to ensure the following while conducting the meetings of the DC and AP of the RVOs:
    a. Meetings of the DC and AP should be held only if there is an agenda for the meeting. Accordingly, the meeting of the DC will be held for considering the issue or disposal of a show cause notice (SCN) to a member. The meeting of an AP would be held to consider the issues raised in the appeal filed by the aggrieved against the order passed by the DC;
    b. Meetings are to be held preferably, through an appropriate Video Conferencing (VC) facility, keeping in view the current pandemic;
    c. One week’s notice is to be given to all the members for holding any meeting and notice for the same is to be sent through email;
    d. The minutes shall be signed by the members of the committee present during the meeting;

    e. The quorum for the meeting should be as provided in the Bye laws of the RVO but should be a minimum of two members including the Chairperson and;
    f. If a member of the committee is related to the person against whom action is proposed by the DC or AP, or there is any other issue of conflict of interest, the member shall recuse himself/herself from the proceedings.
    g. Other conditions:
    i. Governing Board of the RVO shall be the sole authority for fixing the amount of sitting fee to be paid to the members of the DC and AP, but it cannot be less than the amount payable to the independent director as sitting fee;
    ii. In case, any of the member who has been nominated by the IBBI does not agree to the amount of fee proposed to be paid, than RVO shall bring this fact to the notice of IBBI within seven days, upon which another person will be nominated; and
    iii. The tenure of IBBI’s nominee shall, in general be for two years from the date of appointment, unless decided otherwise by the IBBI.
  4. This circular is prepared in consultation with the RVOs.
  5. This Circular is issued in exercise of the powers under clauses (e) and (i) of rule 14 of the Companies (Registered Valuers and Valuation) Rules, 2017.

Leave a comment

Filed under insolvency law, valuation

no insolvency cases.

Vide an amendment to the Insolvency and Bankruptcy Code, government had stayed all insolvency proceedings in respect of defaults occurring after 25th March, 2020 by a period of six months i.e upto 24th September, 2020.

This is due to the covid pandemic and in order to protect the companies during this dire period.

Now vide another notification issued yesterday, i.e. 24th September, this period has been extended by another 3 months i.e. upto 24th December, 2020.

Copy of the notification is available at the IBBI site.

https://www.ibbi.gov.in/

Leave a comment

Filed under insolvency law

voluntary liquidation

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Second Amendment) Regulations, 2020 on 05.08.2020.

The Insolvency and Bankruptcy Code, 2016 enables a corporate person to initiate voluntary liquidation process if it has no debt or it will be able to pay its debts fully from the proceeds of the assets. The corporate person appoints an insolvency professional to conduct the voluntary liquidation process by a resolution of members or partners, or contributories, as the case may be. However, there can be situations which may require appointment of another resolution professional as the liquidator. The amendment made to the Regulations provides that the corporate person may replace the liquidator by appointing another insolvency professional as liquidator by a resolution of members or partners, or contributories, as the case may be.

The amended regulations are effective from 05.08.2020. These are available at www.mca.gov.in and www.ibbi.gov.in.

Leave a comment

Filed under insolvency law

insolvency for corporate persons

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 today.

The Insolvency and Bankruptcy Code, 2016 (Code) envisages appointment of an authorised representative (AR) by the Adjudicating Authority to represent financial creditors in a class, like allottees under a real estate project, in the committee of creditors. For this purpose, the Regulations require the interim resolution professional to offer a choice of three Insolvency Professionals (IP) in the public announcement, and the creditors in a class to choose one of them to act as their authorised representative. The amendment made to the Regulations today provides that the three IPs offered by the interim resolution professional must be from the State or Union Territory, which has the highest number of creditors in the class as per records of the corporate debtor. This will facilitate ease of coordination and communication between the AR and the creditors in the class he represents.

The Regulations currently envisage that the authorised representative shall seek voting instructions from creditors in a class at two stages, namely, (i) before the meeting; and (ii) after circulation of minutes of meeting. The amendment made to the Regulations today provides that the authorised representative shall seek voting instructions only after circulation of minutes of meeting and vote accordingly. He shall, however, circulate the agenda, and may seek preliminary views of creditors in the class before the meeting, to enable him to effectively participate in the meeting.

The Regulations provide that the committee of creditors shall evaluate all compliant resolution plans as per evaluation matrix to identify the best of them and may approve it. The amendment made to the Regulations today provides that after evaluation of all compliant resolution plans as per evaluation matrix, the committee of creditors shall vote on all compliant resolution plans simultaneously. The resolution plan, which receives the highest votes, but not less than sixty-six percent of voting share, shall be considered as approved.

The amendment Regulations are effective from today. These are available at www.mca.gov.in and www.ibbi.gov.in.

Leave a comment

Filed under insolvency law

Insolvency Resolution Process for Corporates

The Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 on 5th October, 2017. According to the Amended Regulations, a Resolution Plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the Corporate Debtor.

The Amendments are available at www.mca.gov.in and www.ibbi.gov.in.

Leave a comment

Filed under company secretary, insolvency law, Uncategorized