In exercise of the powers conferred by clause c and clause t of sub section 1 of section 196 read with section 240 of the Insolvency and Bankruptcy Code

## Report on the Insolvency and Bankruptcy Board of India Insolvency Resolution Process for Corporate Persons Fifth Amendment Regulations, 2022 **1. Executive Summary:** This report analyzes the Insolvency and Bankruptcy Board of India (IBBI) Insolvency Resolution Process for Corporate Persons Fifth Amendment Regulations, 2022, based on the official notification. The amendment introduces a regulatory fee payable to the IBBI related to the resolution process for corporate persons. This fee is calculated as a percentage of the realisable value to creditors under the resolution plan and a percentage of the cost being booked in insolvency resolution process costs in respect of hiring professional services. The amendment aims to strengthen the IBBI's regulatory oversight and resource base. These changes come into effect on October 1, 2022. **2. Introduction:** This report aims to provide a comprehensive overview of the Insolvency and Bankruptcy Board of India (IBBI) Insolvency Resolution Process for Corporate Persons Fifth Amendment Regulations, 2022, based solely on the information provided within the official notification. The report outlines the core objectives, key provisions, affected stakeholders, and potential impacts of the amendment. **3. Policy Overview:** This document amends the Insolvency and Bankruptcy Board of India Insolvency Resolution Process for Corporate Persons Regulations, 2016. The core objective, inferred from the amendment text, is to introduce a regulatory fee to be paid to the IBBI by corporate entities undergoing the insolvency resolution process. This fee appears intended to support the IBBI's operational and regulatory functions. **4. Background and Rationale:** The amendment introduces a regulatory fee structure. The likely reason for this specific amendment, inferred from the text, is to provide the IBBI with a funding mechanism tied directly to the insolvency resolution process. This suggests a need for increased resources to effectively oversee and regulate corporate insolvency resolution processes, potentially driven by an increasing volume of cases or a need for more intensive oversight. The establishment of a regulatory fee likely aims to make the IBBI more financially sustainable and less reliant on other funding sources. **5. Key Provisions / Changes:** This amendment focuses on changes related to fees. * **Specific Part of Original Policy Changed:** The amendment inserts a new clause (ba) into regulation 31 and inserts a new regulation 31A after regulation 31 of the principal regulations. * **New Rule/Provision:** * **Regulation 31(ba):** Mandates inclusion of "a fee payable to the Board under regulation 31A". * **Regulation 31A. Regulatory Fee:** * **Subregulation 1:** Imposes a regulatory fee of 0.25% of the realisable value to creditors under the resolution plan approved under section 31, where such realisable value is more than the liquidation value. This is applicable to resolution plans approved on or after 1st October 2022. * **Subregulation 2:** Imposes a regulatory fee calculated at the rate of one per cent of the cost being booked in insolvency resolution process costs in respect of hiring any professional or other services by the interim resolution professional or resolution professional, as the case may be, for assistance in a corporate insolvency resolution process. * **Difference/Effect of Change:** The amendment introduces a new financial obligation for companies undergoing insolvency resolution. It establishes a direct link between the success of the resolution plan (realisable value) and the fees paid to the IBBI. This change effectively increases the cost of corporate insolvency resolution and makes the company responsible for costs incurred for hiring professionals. **6. Target Audience and Stakeholders:** Based on the text, the following are directly affected: * Corporate entities undergoing the Insolvency Resolution Process (CIRP). * Creditors involved in the resolution plan. * Interim Resolution Professionals (IRPs) and Resolution Professionals (RPs). * The Insolvency and Bankruptcy Board of India (IBBI) itself. * Professionals or other services hired by the interim resolution professional or resolution professional, as the case may be, for assistance in a corporate insolvency resolution process. **7. Implementation Aspects (Inferred):** * **Responsible Agency:** The Insolvency and Bankruptcy Board of India (IBBI) is the responsible body for implementing and overseeing the new fee structure. * **Timelines:** The regulations come into force on 1st October, 2022. The 0.25% fee is applicable to resolution plans approved on or after this date. * **Procedures:** The text references regulation 7 of the Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations, 2016 suggesting that procedures for payment of one per cent regulatory fee already exist within that regulation. The procedures related to the payment of fee related to the resolution plan will likely be communicated by the IBBI. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of these specific changes introduced by the amendment are: * Increased revenue for the IBBI, providing financial resources for regulatory oversight and operational activities. * Potentially increased scrutiny of resolution plans to ensure accurate reporting of realisable value. * A more financially independent and robust regulatory body. * Increased overall cost of the insolvency resolution process for corporate entities. **9. Conclusion:** The Insolvency and Bankruptcy Board of India Insolvency Resolution Process for Corporate Persons Fifth Amendment Regulations, 2022, introduces a regulatory fee structure to the corporate insolvency resolution process. The amendment aims to bolster the IBBI's financial resources and enhance its regulatory capabilities. The introduction of these fees will impact corporate entities, creditors, and insolvency professionals involved in the resolution process. The amendments signify a move towards a more sustainable and robust regulatory framework for insolvency and bankruptcy in India.

Key Entities Referenced