IBBI Discussion Paper proposes Amendments to streamline CIRP Regulations

The Insolvency and Bankruptcy Board of India (IBBI) has released out a Discussion Paper which proposes to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations).
 
The Discussion Paper inter alia proposes the following:
 
1. The insolvency professional (IP) should seek approval of all components of the insolvency resolution process cost, including the expenditure incurred for ongoing operations of the corporate Debtor (CD).
 
2. To review the work/progress of the Corporate Insolvency Resolution Process (CIRP) by the Committee of Creditors (CoC), the Resolution Professional (RP) be mandated to conduct the meetings of CoC every month.
 
3. Before finalisation of valuation report, valuers shall explain the valuation methodology to the members of the committee in a meeting facilitated by the RP.
 
4. Given the advantages associated with the disclosure of fair value with the resolution applicant, fair value should be made part of the Information Memorandum. 
 
5. In order to bring clarity on the continuation of the process when the application filed with the Adjudicating Authority is pending for the extension orders and to enable the RP to fulfil his responsibilities, an amendment to regulation 40 of the CIRP Regulations is proposed. The RP shall continue to discharge his responsibilities under the CIRP, pending the final disposal of the extension application by the AA.
 
6. Regulation 38(1) may be amended to provide that the financial creditors, who have a right to vote under section 21(2) and did not vote in favour of the resolution plan, shall be paid ‘amount due in the event of liquidation’ in priority over financial creditors who voted in favour of the plan and to provide clarity with regard to entitlement of dissenting financial creditors.
 
7. The resolution plan may be structured in two parts. Part A of the resolution plan shall deal with the inflow i.e., payment under the resolution plan (total value of the resolution plan), payment of insolvency resolution process cost, payment schedule, feasibility and viability of the resolution plan etc. while Part B will deal with distribution to the various stakeholders.
 
The public may send their comments on the amendments proposed by IBBI by November 22, 2023 in the prescribed format.
 
A copy of the IBBI Discussion Paper seeking suggestions is enclosed below.
 
Readers are welcome to share their views with Regstreet Law Advisors at info@regstreetlaw.com.