Executive Summary:
This document contains the Insolvency and Bankruptcy Board of India (IBBI) Liquidation Process Amendment Regulations, 2018, which amend the 2016 regulations. The amendments concern liquidation costs, the substitution of "company secretaries" with "secretarial auditors", and the process of asset sales, including the option to sell the corporate debtor as a going concern. These regulations come into force on April 1, 2018.
Key Points / Main Content:
* **General Information**
* These regulations are called the Insolvency and Bankruptcy Board of India Liquidation Process Amendment Regulations, 2018.
* These regulations amend the Insolvency and Bankruptcy Board of India Liquidation Process Regulations, 2016.
* The regulations come into force on April 1, 2018.
* **Amendment to Regulation 2 (Liquidation Costs)**
* A new clause (ea) is inserted to define liquidation costs, including:
* Fees payable to the liquidator under regulation 4.
* Remuneration payable by the liquidator under regulation 7.
* Costs incurred by the liquidator under regulation 24.
* Interest on interim finance for a period of twelve months or for the period from the liquidation commencement date till repayment of interim finance, whichever is lower.
* **Amendment to Regulation 3 (Professionals Assistance)**
* In subregulation 1, in clause (c), in subclause (i), the words "company secretaries" are substituted with "secretarial auditors".
* **Amendment to Regulation 32 (Manner of Sale of Assets)**
* In clause (b), for subclause (iii), a new subclause is substituted: "the assets in parcels; or".
* A new clause (c) is inserted: "sell the corporate debtor as a going concern".
Impact Analysis:
* **Liquidators:**
* Impact: The amendment to regulation 2 provides clarity on what constitutes liquidation costs, affecting their fees, remuneration, and cost recovery. Regulation 3 affects who can be appointed as a professional assistant. Regulation 32 affects how the assets may be sold.
* Action Required: Liquidators must account for the revised definition of liquidation costs and who can be appointed to assist, and consider selling the corporate debtor as a going concern, in addition to selling assets in parcels.
* **Insolvency and Bankruptcy Board of India (IBBI):**
* Impact: The IBBI is responsible for implementing and overseeing these amended regulations.
* Action Required: Ensure compliance with the amended regulations during the liquidation process.
* **Corporate Debtors:**
* Impact: The option to be sold as a going concern may impact the outcome of the liquidation process.
* Action Required: Be aware of the possibility of being sold as a going concern.
* **Creditors:**
* Impact: The definition of liquidation costs directly impacts the funds available to creditors. The option to sell the corporate debtor as a going concern may also have an effect on the value recovered by creditors.
* Action Required: Understand how the revised definition of liquidation costs and the option to sell the corporate debtor as a going concern affect their potential recovery.
* **Secretarial Auditors:**
* Impact: This amendment expands the scope of work available to secretarial auditors.
* Action Required: Be aware of their eligibility to be appointed under Regulation 3.
Key Entities Referenced
New Delhi: The location where the notification was issued.
Insolvency and Bankruptcy Board of India (IBBI): A regulatory body in India responsible for overseeing insolvency proceedings and regulating insolvency professionals.
Insolvency and Bankruptcy Code, 2016: A law in India that consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals.
Insolvency and Bankruptcy Board of India Liquidation Process Regulations, 2016: Regulations framed by the IBBI pertaining to the liquidation process under the Insolvency and Bankruptcy Code.
Insolvency and Bankruptcy Board of India Liquidation Process Amendment Regulations, 2018: Amendments made to the Insolvency and Bankruptcy Board of India Liquidation Process Regulations, 2016.
Section 196: Section of the Insolvency and Bankruptcy Code, 2016 that deals with powers and functions of the Insolvency and Bankruptcy Board of India.
Section 240: Section of the Insolvency and Bankruptcy Code, 2016 that deals with the power to make regulations.
Dr. M. S. Sahoo: Chairperson of the Insolvency and Bankruptcy Board of India.
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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
NOTIFICATION
New Delhi, the 27th March, 2018
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (LIQUIDATION PROCESS)
(AMENDMENT) REGULATIONS, 2018
No. IBBI/2017-18/GN/REG028.—In exercise of the powers conferred by clause (t) of sub-section
(1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the
Insolvency and Bankruptcy Board of India hereby makes the following regulations to amend the Insolvency
and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, namely: -
1. (1) These regulations may be called the Insolvency and Bankruptcy Board of India (Liquidation Process)
(Amendment) Regulations, 2018.
(2) They shall come into force on 1st April, 2018.
2. In the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, (hereinafter
referred to as the principal regulations), in regulation 2, after clause (e), the following clause shall be
inserted, namely: -
“(ea) “liquidation cost” under sub-section (16) of section 5 means-
(a) fee payable to the liquidator under regulation 4;
(b) remuneration payable by the liquidator under regulation 7;
(c) cost incurred by the liquidator under regulation 24; and
(d) interest on interim finance for a period of twelve months or for the period from the liquidation
commencement date till repayment of interim finance, whichever is lower.”.
3. In the principal regulations, in regulation 3, in sub-regulation (1), in clause (c), in sub-clause (i), for the
words ‘company secretaries’, the words ‘secretarial auditors’ shall be substituted.
4. In the principal regulations, in regulation 32, -
(I) in clause (b), for sub-clause (iii), the following sub-clause shall be substituted, namely:-
“(iii) the assets in parcels; or”;
(II) after clause (b), the following clause shall be inserted, namely:-
“(c) sell the corporate debtor as a going concern.”.
Dr. M. S. SAHOO, Chairperson
[ADVT.-III/4/Exty./494/17]
Note : The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 were
published vide notification No. IBBI/2016-17/GN/REG005 on 15th December, 2016 in the Gazette of
India, Extraordinary, Part III, Section 4, No. 460 dated 15th December, 2016 and these have not been
amended so far.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.