NEW DELHI: Insolvency and Bankruptcy Board of India (IBBI) has made major amendments to strengthen the regulatory framework of the liquidation process under Insolvency and Bankruptcy Board of India Regulations, 2016 and notified the amendment on February 12, 2024.These changes are aimed at facilitating a smoother process for liquidation, ensuring accountability, and bolstering the confidence of stakeholders in the liquidation process.According to one of the amendments, wherever the corporate debtor has given possession to an allottee in a real estate project, such asset shall not form a part of the liquidation estate of the corporate debtor.Nesara B.S, chairman, Concorde said, “It is a good move, however, there needs to be clarity and differentiation between completed and under construction projects. Completed projects that are registered where units have been handed over can be excluded, whereas under construction projects where allottees have paid part amount and registration and handover is not done, must be included in a consolidated resolution plan, otherwise achieving the resolution might be difficult.”The liquidator may reduce the reserve price by up to 25% for assets with existing valuation of the Corporate Insolvency Resolution Process (CIRP) on one occasion with the approval of the Stakeholders’ Consultation Committee (SCC) at any time during the process. For assets where fresh valuation is conducted during liquidation, the reserve price can be reduced by up to 10% in subsequent auctions with SCC’s approval.Now, the liquidator must file the proposal of compromise or arrangement only in cases where the committee of creditors made such a recommendation during the CIRP and such proposal shall not be filed after the expiry of thirty days from the liquidationcommencement date.Liquidators are mandated to convene SCC meetings with a maximum interval of 30 days, to ensure timely decisions and oversight. However, the SCC may reduce the frequency of meetings if deemed necessary, provided that at least a minimum of one meeting is held per quarter. Decisions during these meetings are to be taken based on present and voting members.At every SCC meeting, liquidators are required to present a comprehensive report which inter alia includes progress made in the liquidation process, the consolidated status of all legal proceedings, and cumulative costs incurred during the process. Any cost overruns beyond initial estimates must be justified with a rationalization plan.
Published On Feb 14, 2024 at 12:30 PM IST
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