The Insolvency and Bankruptcy Board of India (IBBI) has the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP), which took immediate effect and has been published in the .
The updated rules allow for improved participation and performance of the resolution professional, committee of creditors (CoC) and financial creditors.
Resolution professionals can now invite expressions of interest for submission of resolution plans for a corporate debtor, either as a whole or for the sale of one or more assets. This requires CoC approval. The resolution professional will also present all the resolution plans submitted to the CoC, so it has access to ample information for decision making.
The CoC can also direct the resolution professional to invite interim finance providers as observers to committee meetings.
Though the interim finance providers will not have any voting rights, attending the meetings may help them develop a better understanding of the operational status of the corporate debtor. They can then make informed decisions about funding requirements.
In addition, financial creditors who vote against the final resolution plan will be paid pro rata and get priority over those who vote in favour. This balances the rights of dissenting creditors with the practical limitations of phased implementation of a resolution plan that provides for staged payments.
The amended rules are intended to reduce the time taken, prevent value erosion, encourage investor participation and improve transparency.
