Insolvency and Bankruptcy Board of India(IBBI) has made several changes to regulations around insolvency resolution process for corporates as well as the liquidation process.
The amendments require completion of liquidation process within one year of its commencement notwithstanding the pendency of applications for avoidance transactions.
The amendments also specifies a maximum time of 90 days from the order of liquidation for completion of compromise,if any proposed by the stakeholders under section 230 of the Companies Act,2013.This will ensure that liquidation process is closed at the earliest.
The amendments also require the financial creditors who are financial institutions to contribute towards the liquidation cost where the corporate debtor does not have adequate liquid resources to complete liquidation.
However,such contribution along with interest at bank rate thereon shall form part of liquidation cost which is paid in priority.
The amendments provide for constitution of a Stakeholders’ Consultation Committee having representation from secured financial creditors, employees, government, shareholder among others to advise the liquidator on matters relating to sale.However,the advice of this committee is not binding on the liquidator.
The amendments also specify the process for withdrawal of applications before constitution of committee of creditors (CoC) and after issue of invitation for expression of interest.