IBBI amends the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

Last updated: 06 August 2020

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The Insolvency and Bankruptcy Board of India (IBBI) has introduced amendments to the Liquidation Process Regulations of 2016. These changes clarify how liquidators are compensated. Previously, the committee of creditors was responsible for setting liquidator fees. If they didn't, fees were based on a percentage of amounts realised and distributed. The amendment specifies that a liquidator is entitled to a fee for amounts they realise, even if they don't distribute them, and similarly for amounts they distribute but didn't realise themselves. These updated regulations are effective immediately.

Insolvency and Bankruptcy Board of India

No. IBBI/PR/2020/08

05th August, 2020

The Insolvency and Bankruptcy Board of India amends the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Third Amendment) Regulations, 2020 today.

2. The Regulations require the committee of creditors to fix the fee payable to the liquidator. Where the fee has not been fixed by the committee of creditors, the Regulations provide for a fee as a percentage of the amount realised and of the amount distributed by the liquidator. There have been instances where a liquidator realises the amount while another liquidator distributes the same to stakeholders. The amendment made to the Regulations today clarifies that where a liquidator realises any amount, but does not distribute the same, he shall be entitled to a fee corresponding to the amount realised by him. Likewise, where a liquidator distributes any amount, which is not realised by him, he shall be entitled to a fee corresponding to the amount distributed by him.

3. The amended regulations are effective from today. These are available at www.mca.gov.in and www.ibbi.gov.in.

FAQ :

The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 have been amended.

The amendments clarify how liquidator fees are calculated, particularly when different liquidators handle realisation and distribution of funds.

If the committee of creditors fixes the fee, that applies. Otherwise, the fee is based on amounts realised and distributed. The amendment clarifies entitlement for realisation and distribution separately.

The amended regulations are effective from 5th August, 2020.

The amended regulations are available on www.mca.gov.in and www.ibbi.gov.in.