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The Insolvency and Bankruptcy Board of India (IBBI) has notified a new set of regulations to amend the existing IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which shall come into force as on the date of its publication in the Official Gazette.

IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021

Applicability

These regulations shall apply to every corporate insolvency resolution process (CIRP)

  • Ongoing or
  • Commencing on or after the date of coming into force of these regulations.

Sr. No.

Amendment

Effect

1

In Regulation 3(1), for the words 'a a resolution professional', the words 'an interim resolution professional or a resolution professional, as the case may be,' shall be substituted.

Now, an insolvency professional shall be eligible to be appointed as an interim resolution professional (in addition to resolution professional) for a CIRP of a corporate debtor if he and all partners and directors of the insolvency professional entity of which he is a partner or director are independent of the corporate debtor.

2

In Regulation 3(2), for the words 'a a resolution professional', the words 'an interim resolution professional or a resolution professional, as the case may be,' shall be substituted.

With effect to the changes made in sub-regulation (1), even an interim resolution professional is required to make disclosures at the time of his appointment and thereafter in accordance with the Code of Conduct.

3

For Regulation 3(3), the following shall be substituted:

An interim resolution professional or a resolution professional, who is a director or a partner of an insolvency professional entity, shall not continue as the interim resolution professional or resolution professional, as the case may be, in a corporate insolvency resolution process, if the insolvency professional entity or any other partner or director of such insolvency professional entity represents any other stakeholder in that corporate insolvency resolution process.

Again, to give effect to the changes made in sub-regulation (1), the Board has amended sub-regulation (3) to include interim resolution professional in the ambit.

4

In Regulation 4, for the words 'interim resolution professional', the words 'interim resolution professional or the resolution professional, as the case may be,' shall be substituted.

With effect to this amendment, power has been granted to the resolution professional (in addition to an interim resolution professional) to access the books of account, records and other relevant documents and information, to the extent relevant for discharging his duties under the Code.

5

In Regulation 4A(2)(b), for the words 'insolvency professionals', the words 'resolution professional' shall be substituted.

With the changes introduced in Regulation 3 regarding inclusion of interim resolution professional, the Board has amended Regulation 4A(2)(b) to restrict the scope to resolution professional only for the purpose of representing the creditors.

However, it can be noted that, pursuant to this amendment an amendment in sub-regulation (3) was also required as it gives reference of sub-regulation (2) clause (b) but the Board did not amend it. Nevertheless, it will not hamper the effect of this amendment.

6

Insertion of Regulation 4B:

Disclosure of change in name and address of corporate debtor.

Where a corporate debtor has changed its name or registered office address during the period of two years preceding the insolvency commencement date, the interim resolution professional or resolution professional, as the case may be, shall disclose all the former name(s) and registered office address(es) so changed along with the current name and registered office address in every communication, record, proceeding or any other document.

The Insolvency Professional shall disclose all the former name(s) and registered office address(es) changed during the period of 2 years preceding the commencement date of insolvency along with current name and address in every communication, record or any other documents.

7

In Regulation 9A(1) for the word and figures 'regulation 7, 8 or 9,', the word and figures 'regulation 7, 8, 8A or 9,' shall be substituted.

-

8

In Regulation 13(2)(b), after the words 'corporate debtor', the words 'or their authorized representatives' shall be inserted.

-

9

In Regulation 19(1), for the words 'the resolution professional', the words 'the interim resolution professional or the resolution professional, as the case may be,' shall be substituted.

-

10

For Regulation 27, the following shall be substituted:

Appointment of Professionals.

(1) The resolution professional shall, within seven days of his appointment but not later than forty-seventh day from the insolvency commencement date, appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with regulation 35.

(2) The interim resolution professional or the resolution professional, as the case may be, may appoint any professional, in addition to registered valuers under sub-regulation (1), to assist him in discharge of his duties in conduct of the corporate insolvency resolution process, if he is of the opinion that the services of such professional are required and such services are not available with the corporate debtor.

(3) The interim resolution professional or the resolution professional, as the case may be, shall appoint a professional under this regulation on an arm’s length basis following an objective and transparent process:

Provided that the following persons shall not be appointed, namely: -

(a) a relative of the resolution professional;

(b) a related party of the corporate debtor;

(c) an auditor of the corporate debtor at any time during the period of five years preceding the insolvency commencement date;

(d) a partner or director of the insolvency professional entity of which the resolution professional is a partner or director.

(4) The invoice for fee and other expenses incurred by a professional appointed under this regulation shall be raised in the name of the professional and be paid directly into the bank account of such professional.

The whole-sole purpose of amending this regulation is to authorize interim resolution professionals and the resolution professionals to appoint, in addition to two registered valuers, any other professional as found necessary.

11

In Regulation 35A(2), the words 'under intimation to the Board' shall be deleted.

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12

In Regulation 40B, after sub-regulation (1A), the following sub-regulation shall be inserted:

(1B) The resolution professional shall file Form CIRP 8 intimating details of his opinion and determination under regulation 35A, on or before the one hundred and fortieth day of the insolvency commencement date:

Provided that the filing of Form CIRP 8 shall not become due unless a period of thirty days has elapsed from the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021.

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13

in Form H:

(i) under item 9, in the table, the entry Regulation 35A shall be deleted.

(ii) after item 14, the following item shall be inserted:

14A. Whether the resolution professional has, in accordance with regulation 35A, -

(a) applied to the Adjudicating Authority on or before the one hundred and thirty-fifth day of the insolvency commencement date:

Yes / No

(b) filed Form CIRP 8 with the Board on or before the one hundred and fortieth day of the insolvency commencement date:

Yes / No

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Disclaimer: The author is based in Jabalpur and is a Practicing Company Secretary dealing in Corporate, Legal & Taxation services. The information contained in this write up, as provided by the author, is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Author recommends that professional advice is sought before taking any action on specific issues.

 

The author can also be reached at cstanveersaluja@gmail.com


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Category Corporate Law, Other Articles by - CS Tanveer Singh Saluja 



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