Tag Archives: resolution professional

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:

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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.

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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/

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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.

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