The Insolvency and Bankruptcy Board of India vide its notification dated 24th November 2020 has invited public comments on its discussion paper on IBBI (Voluntary Liquidation Process) Regulations, 2017, which provides that a Corporate Person may initiate voluntary liquidation proceedings if two conditions are met i.e the CP has no debt or is in a position to pay all the debts and the CP is not being liquidated to defraud any person.
The Public Comments may be submitted electronically by 15th December, 2020 through the IBBI website, www.ibbi.gov.in.
The proposed amendment under the Voluntary Liquidation Regulations are as follows:
- The CP be allowed to seek approval of the AA for withdrawal from the process and Such withdrawal is to be allowed only if it is backed by a special resolution of the members, partners or contributories, as the case may be, of the CP.
- Where there has been no sale of assets, the withdrawal shall have approval of creditors representing two-thirds in value of the outstanding debt. Where sale has commenced, the withdrawal shall have approval of all unpaid creditors, unless the dues of all unpaid creditors are settled before passing of the resolution.
- The liquidator shall approach the AA with an application for withdrawal, along with an affirmation by the liquidator that (a) due process for withdrawal of voluntary liquidation has been followed, and (b) the withdrawal is not initiated to defraud any person and the CP is solvent.
- After the application to withdraw the voluntary liquidation is approved by the AA, the liquidator shall forward a copy of the order of AA to the Board and the CP.
