IBBI has issued a Discussion Paper on measures for increasing the possibility of resolution, value of resolution plan and enabling timely resolution on 7th June, 2023. There have been criticisms regarding the low number of resolved companies and the longer-than-expected resolution time. In order to address these issues, several proposals have been made to improve the resolution process.
The first proposal suggests amending Regulation 28 of the Insolvency Resolution Process for Corporate Persons Regulations, 2016. Currently, there is no timeline specified for informing the resolution professional about the assignment or transfer of debt during the resolution process. The proposal recommends that both the original creditor and the assignee or transferee should inform the resolution professional within seven days of such assignment or transfer. This amendment aims to enhance transparency and enable accurate record-keeping of the corporate debtor’s debt obligations.
The second proposal focuses on obtaining necessary information from the personnel of the corporate debtor. It suggests amending the CIRP Regulations to mandate that the personnel of the corporate debtor hand over the assets according to the balance sheet or any other records referred to in Section 18(1)(f). If such a list is not readily available, the corporate debtor should prepare a list of assets and documents to be handed over. This amendment aims to ensure a smooth transfer of control and custody of assets and records to the resolution professional.
The third proposal pertains to the timeline for the submission and consolidation of claims. Currently, creditors are required to submit claims with proof by the last date mentioned in the public announcement or no later than the 90th day from the insolvency commencement date. The proposal suggests extending the timeline for claim submission until 90 days from the insolvency commencement date or up to the date of the latest request for resolution plans. This extension allows for a more thorough and inclusive claim gathering process, especially in complex cases. It also proposes that the resolution professional provide reasons for the rejection of any claim, enhancing transparency in the process.
Lastly, there is a proposal to increase the duties of Authorized Representatives (ARs) of financial creditors. The AR plays a crucial role in safeguarding the interests of the financial creditors during the resolution process. The proposal suggests outlining the rights and obligations of ARs in more detail to ensure their active involvement in the resolution process.
In conclusion, the discussion paper highlights various proposals for improving the resolution process under the Insolvency and Bankruptcy Code. These proposals aim to address issues related to timely resolution, value realization, and efficient management of claims. By implementing these amendments, it is anticipated that the resolution process will become more streamlined, transparent, and conducive to maximizing the value of assets while ensuring the interests of stakeholders are protected.