The Insolvency and Bankruptcy Board of India Vide Notification dated 6th January 2020 has brought in several major amendments to The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations.
Key highlights of the amendment:
A new Regulation 2(1) (ca) has been inserted, namely:-
“Corporate Liquidation Account means the Corporate Liquidation Account operated and maintained by the Board under Regulation 46.”
The Amendment clarifies that a person, who is not eligible under Insolvency and Bankruptcy Code, 2016 (IBC) to submit a resolution plan for insolvency resolution of a corporate debtor, shall not be a party in any manner to a compromise or arrangement of the corporate debtor under section 230 of the Companies Act, 2013.
Regulation 6(2) (q) related to “Registers and books of account” has been substituted, to read as “Register of unclaimed dividends and undistributed proceeds”.
The Amendment clarifies that a secured creditor, who proceeds to realize its security interest, shall contribute its share of the insolvency resolution process cost, liquidation process cost and workmen’s dues, within 90 days of the liquidation commencement date. It shall also pay excess of realized value of the asset, which is subject to security interest, over the amount of its claims admitted, within 180 days of the liquidation commencement date. Where the secured creditor fails to pay such amounts to the Liquidator within 90 days or 180 days, as the case may be, the asset shall become part of Liquidation Estate.
Further the secured creditor shall not sell or transfer an asset, which is subject to security interest, to any person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor.
Under Regulation 46 which deals with “Corporate Liquidation Account” stands substituted, the Board shall operate and maintain an Account to be called the Corporate Liquidation Account in the Public Accounts of India. A Liquidator shall deposit the amount of unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process along with any income earned thereon into the Corporate Liquidation Account before he submits an application for dissolution of the corporate debtor. It also provides a process for a stakeholder to seek withdrawal from the Corporate Liquidation Account.
Further a new Form-I has been newly inserted related to “Deposit of Unclaimed Dividends and / or Undistributed Proceeds” under Regulation 46(5).
Click here to read the Notification.
