Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020
By INSOL INDIA EDITORIAL TEAM Posted On : August 30, 2020
On August 7, 2020, the IBBI enacted the IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 (“CIRP Amendment Regulations”). The CIRP Amendment Regulations has made the following amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”):
- Regulation 4A of the CIRP Regulations requires the Interim Resolution Professional (“IRP”) to identify 3 (three)insolvency professionals (“IP(s)”) for appointment as authorized representative (“AR”) by the creditors in a class. By virtue of the CIRP Amendment Regulations, clause (aa) has been inserted in sub-regulation (2) of regulation 4A, which provides that the 3 (three) IPs to be identified must be from the State or Union Territory having the highest number of creditors in the class as per their addresses in the records of the corporate debtor. This is aimed at easing cooperation between the AR and the creditors he represents.
- Regulation 16A(9) of the CIRP Regulations, has been substituted. By virtue of the amendment, the authorised representative is required to circulate the agenda to creditors in a class and seek their preliminary views prior to the meeting, so as to enable him to effectively participate in the meeting. The amendment further provides for two provisos to the regulation, which state that – (i) the creditors shall have a twelve-hour time window to submit their preliminary views, which shall open at least twenty-four hours after the authorized representative seeks such views; and (ii) such preliminary views do not constitute voting instructions on part of the creditors.
- The CIRP Amendment Regulations have substituted/amended sub-regulation (3) of regulation 39. As per the new provision, the committee of creditors (“CoC”) shall evaluate the resolution plans as per the evaluation matrix and record its deliberations on the feasibility and viability of each plan. Further, voting on all resolution plans shall take place simultaneously. This has been provided with an aim to increase transparency.
The CIRP Amendment Regulations further provide that in case only 1 (one) plan is put to vote, it shall be considered approved if it receives the requisite votes (66% of the CoC). On the other hand, in cases where 2 (two) or more plans are put to vote, the plan with the highest votes, but not less than the requisite votes, shall be considered approved. The tie-breaking formula announced before voting should be relied upon in case 2 (two) or more plans receive equal and more than the requisite votes. In case none of the plans receive requisite votes, fresh voting on the plan that received the highest votes shall take place, subject to timelines under the IBC.