The Insolvency and Bankruptcy Board of India on 20th July 2021 has specified the format of CIRP 8, which needs to be filed in respect of every CIRP ongoing or commencing on or after 14th July, 2021.
As per the regulation 35A which deals with the identification of resolution application in which the following timeline shall be adopted by the resolution professional( RP) :
The resolution professional shall form an opinion on transactions relating to Preferential transactions and relevant time, Avoidance of undervalued transactions, Extortionate credit transactions, and Fraudulent trading by 75th day of the insolvency commencement date.
Further, it shall make a determination on the above transactions by 115th day and file an application before the adjusting authority by 135th day.
Further regulation 40B(IB) of the CIRP Regulations requires the resolution professional to file Form CIRP 8 intimating details of his opinion and determination under regulation 35A, by 140th day of the insolvency commencement date.
The Resolution Professional is duty-bound to find out if a corporate debtor 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. This not only claws back the value lost in such transactions increasing the possibility of reorganization of the Corporate Debtor (CD) through a resolution plan, but also disincentivises such transactions preventing stress to the CD.
For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions.