Last updated: 08 Jul 2024 10:00 Posted in:
India’s insolvency watchdog is seeking public comment on proposed change to the insolvency rules to make the process more streamlined and cost-effective.
The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to the Insolvency Resolution Process for Corporate Process regulations.
These amendments are expected to enhance the efficiency and transparency of the Corporate Insolvency Resolution Process (CIRP), and benefiting creditors and other stakeholders involved in the CIRP.
In a discussion paper, the IBBI proposes that the registered valuer should submit a comprehensive valuation report for the corporate debtor as a whole, rather than separate valuations for different asset classes.
This proposal seeks to eliminate inconsistencies between the CIRP regulations and the Companies (Registered Valuers and Valuation) Rules.
For companies with an asset size of up to Rs 1,000 crore (£95,000) and micro, small and medium enterprises (MSMEs), the board proposes to appoint only one registered valuer for providing the estimates of the fair value and the liquidation value.
This measure will reduce CIRP costs and expediting the process for small entities.
The IBBI – a statutory body overseen by 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 (AR) for creditors, the IBBI, also proposed to allow the interim resolution professional to enable the AR to participate in the Committee of Creditors meetings immediately after an application for their appointment is submitted to the adjudicating authority.
The discussion paper also addressed the issue of release of guarantees in the resolution plan; the board proposes that such a proposal submitted by the applicant will not extinguish the rights of creditors to proceed against
guarantors and enforce realisation of guarantees governed through various agreements.