Insolvency and Bankruptcy Board amends Liquidation Process Regulations
- Posted By
8th Aug, 2020
- The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Third Amendment) Regulations, 2020.
- IBBI is a key institution in implementing the Insolvency and Bankruptcy Code (IBC), which provides for market-linked and time-bound resolution of stressed assets.
- IBC provides for market-linked and time-bound resolution of stressed assets.
- IBC handles cases under it using tribunals’ namely National Company Law Tribunal (NCLT) and Debt Recovery Tribunal (DRT).
- In case the insolvency resolution process does not succeed, then the company concerned goes for liquidation.
- When a company goes into liquidation under IBC, the committee of creditors (CoC) appoints a liquidator and decides on a fixed fee to be paid for their services.
- A liquidator can claim fees only on the basis of the amount of work they have done during the liquidation process of a company, be it in terms of the amount realised or distributed.
- The new regulations require the committee of creditors to fix the fee payable to the liquidator.
- Where the fee has not been fixed by the committee of creditors, the regulations provide for a fee as a percentage of the amount realized and of the amount distributed by the liquidator.
- It also amended the regulations for voluntary liquidation to enable a corporation to appoint an alternate liquidator at any point during the process through a resolution of members or partners, or contributories.