IBBI Streamlines Resolution Process For Corporate Debtors

(The Corner Office Journal) -- The Insolvency & Bankruptcy Board of India (IBBI) amended the regulations related to the insolvency resolution process for corporate persons to further streamline and strengthen the corporate insolvency resolution process (CIRP).

The changes in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations are effective from 26 May, the IBBI said in a statement.

The insolvency regulator said the key amendments are:

Facilitating Part-Wise Resolution

=> The resolution professional, with the approval of the committee of creditors, can invite expression of interest for submission of resolution plans for the corporate debtor as a whole, or for sale of one or more of assets, or for both.

Impact: The concurrent invitations can help reduce timelines for the resolution process, prevent value erosion in viable segments, and encourage broader investor participation.

Harmonizing Payment Timelines

=> If a resolution plan provides for payment in stages, the financial creditors who did not vote in favor of the resolution plan will be paid at least pro-rata and in priority over financial creditors, who voted in favor of the plan, in each stage.

Impact: This approach balances the legitimate rights of dissenting creditors with the practical constraints of phased implementations.

Supporting Interim Finance Providers

=> The committee of creditors can direct the resolution professional to invite the interim finance providers to attend their meetings as observers without voting rights.

Impact: The measure aims to provide interim finance providers with a better understanding of the corporate debtor’s operational status, thereby enabling them to make well-informed decisions regarding funding requirements.

Presenting All Resolution Plans

=> The resolution professionals are now required to present all resolution plans received, including those that are non-compliant, to the committee of creditors along with relevant details.

Impact: This provision ensures that the committee of creditors has access to comprehensive information for decision-making, which may lead to more informed choices and ultimately contribute to a more transparent and effective resolution process.

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