IBC REGULATION TWEAKS VIJAYALAKSHMI RAJU BASICS OF LAW Tue, Dec 03, 2019, at ,09:15 AM The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2019, on November 28. Some of the amendments made by these regulations are consequential to the Insolvency and Bankruptcy Code (Amendment) Act, 2019, which came into force on August 5. The Insolvency and Bankruptcy Code, 2016, envisages corporate insolvency resolution process (CIRP) for reorganisation and insolvency resolution of corporate debtors. An insolvency professional conducts the CIRP and manages its operations during the CIRP. Keeping in view the responsibilities of insolvency professionals and the importance of CIRP, the code casts an obligation on the IBBI and the IPA to monitor performance of insolvency professionals, and to collect, maintain and disseminate information and records relating to insolvency process of corporate debtors. It also casts an obligation on insolvency professionals to forward / submit certain information and records relating to CIRP to the IPA and IBBI. WHAT IS INSOLVENCY AND BANKRUPTCY CODE? The Insolvency and Bankruptcy Code, 2016, (IBC) is the bankruptcy law that seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy. AIM: The 2016 code provides for a time-bound process to resolve insolvency. When a default in repayment occurs, creditors gain control over the debtor’s assets and must make decisions to resolve insolvency within a 180-day period. To ensure an uninterrupted resolution process, the code provides immunity to debtors from resolution claims of creditors during this period. The code also consolidates provisions of the current legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency. WHO FACILITATES THE INSOLVENCY RESOLUTION? TInsolvency professionals: They will administer the resolution process, manage the assets of the debtor and provide information for creditors to assist them in decision-making. Insolvency professional agencies: insolvency professionals will be registered with insolvency professional agencies. The agencies conduct examinations to certify insolvency professionals and enforce a code of conduct for their performance. Information utilities: Creditors will report financial information of the debt owed to them by the debtor. Such information will include records of debt, liabilities and defaults. Adjudicating authorities: The proceedings of the resolution process will be adjudicated by the National Companies Law Tribunal for companies and the Debt Recovery Tribunal for individuals. The duties of the authorities will include approval to initiate the resolution process, appoint the insolvency professional, and approve the final decision of creditors. Insolvency and Bankruptcy Board: The board will regulate insolvency professionals, insolvency professional agencies and information utilities set up under the code. WHAT IS THE PROCEDURE TO RESOLVE INSOLVENCY? The code proposes the following steps to resolve insolvency… Initiation: When a default occurs, the resolution process may be initiated by the debtor or creditor. A committee consisting of the financial creditors will take a decision regarding the future of the outstanding debt owed to them. They may choose to revive the debt owed to them or sell (liquidate) the assets of the debtor to repay the debts owed to them. If a decision is not taken in 180 days, the debtor’s assets go into liquidation. Liquidation: If the debtor goes into liquidation, an insolvency professional administers the liquidation process. Proceeds from the sale of the debtor’s assets are distributed in the already established order of precedence.