Current Affairs

Insolvency and Bankruptcy Board of India Regulations, 2016, amended by IBBI

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    22nd Jul, 2021

Context

The Insolvency and Bankruptcy Board of India (IBBI) amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2016.

About the amendment provisions in the IBBI regulations

  • The amendment regulations seek to enhance discipline, transparency, and accountability in corporate insolvency proceedings.

                               Problems

                          Amendments

1. In case of corporate debtor (CD) changed its name or registered office address before commencement of insolvency. The stakeholders may find it difficult to relate to the new name or registered office address and consequently fail to participate in the Corporate Insolvency Resolution Process (CIRP).

  • The amendment requires an insolvency professional (IP) conducting CIRP to disclose all former names and registered office address(es) so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the CD, in all its communications and records.

2. The interim resolution professional (IRP) or resolution professional (RP) may appoint any professional, including registered valuers, to assist him in the discharge of his duties in the conduct of the CIRP.

 

  • The amendment provides that the IRP/RP may appoint a professional, other than registered valuers if he thinks that the services of such professionals are required and such services are not available with the CD.
  • Such appointments shall be made on an arm’s length basis following an objective and transparent process. The invoice for the fee shall be raised in the name of the professional and be paid into his bank account.

3. The value lost in transactions increasing the possibility of re-organisation of the CD through a resolution plan.

  • The RP is duty-bound to find out if a CD has been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the Adjudicating Authority seeking appropriate relief.

 

Insolvency and Bankruptcy Board of India

  • It was established in 2016 under the Insolvency and Bankruptcy Code, 2016 (Code).
  • It is a key pillar for the implementation of the Code.

Insolvency and Bankruptcy Code

  • The code consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.