Context: Recently, the Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

• The amendment regulations enhance the discipline, transparency, and accountability into the corporate insolvency process, resolution professionals (RPs).

Key Amendments

• This not only claws back the value lost in such transactions, increasing the possibility of reorganisation of the corporate debtor through a resolution plan, but also disincentivises such transactions, preventing stress to the company.
• The new regulations for the insolvency resolution process for corporate persons allow the RP to appoint any professional, including registered valuers, to assist him in discharge of his duties during the corporate insolvency resolution process (CIRP).
• Such appointments shall be made at arm’s length, following an objective and transparent process. The invoice for fee shall be raised in the name of the professional and be paid into his bank account.
• It also required the RPs to disclose all former names and registered office address, changed in the two years preceding the commencement of insolvency, along with the current details.
• The corporate debtor may have changed its name or registered office address prior to commencement of insolvency.
• The stakeholders may find it difficult to relate to the new name or registered office address and consequently fail to participate in the process.
• 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 on or before the 140th day of the insolvency commencement date.
• The adherence to these timelines will largely depend on the availability of adequate data and information required for assessment of these transactions.

By: Shubham Tiwari