The Insolvency and Bankruptcy Board of India (IBBI) has published a discussion paper on new amendments to the Insolvency and Bankruptcy Board of India (Information Utilities) (Amendment) Regulations, 2021.
According to the IBBI, these changes would enhance the effectiveness and credibility of the record of default (RoD) issued by information utilities (IUs). The RoD is a crucial component in adjudicating insolvency petitions. It also invited comment from stakeholders on proposed changes to the framework pertaining to the process of issuance of an RoD by IUs.
Changes proposed include extending the response time for debtors from three to seven days to address default notices, with three reminders being sent to ensure ample opportunity for responses. This change would “prevent recalcitrant debtors from causing delays at the admission stage”, the discussion paper explained.
The IBBI also recommended restricting the delivery of default notices to email addresses registered by debtors with the IUs, the Ministry of Corporate Affairs, or the Central Registry of Securitisation Asset Reconstruction and Security Interest of India. Exceptions will be made for banks listed under the RBI Act, whose information is considered reliable based on audited records.
Creditors will now be required to provide proof of debt and default, along with the debtor’s latest acknowledgment of the debt, supported by a declaration verifying the documents. This excludes certain banks. The IBBI also mandates that IUs conduct thorough due diligence and verification of all submitted financial information before issuing RoDs.
Further amendments include categorising RoDs based on disputes. Debtors must upload proof of any dispute, and the IU will issue authenticated RoDs for undisputed debts, particularly those acknowledged by specific banks. Additional fields such as the type of debt, details of disputed remarks, and the date and amount of the last repayment will be included in the RoD.
