The Insolvency and Bankruptcy Board of India (IBBI) has amendments to regulations on the process, including , which have immediate effect. The amendments aim to enhance efficiency, transparency and integrity.
Key changes include:
(1) Strengthening the auction process.
(a) Bidders will now have 30 days to participate in an auction with the verification process streamlined.
(b) The auction notice must state that should the successful bidder be found ineligible, their earnest money deposit will be forfeited.
(c) All necessary documents, including the eligibility declaration, must be submitted through the electronic auction platform.
(d) The eligibility of the highest bidder is to be verified within three days of the auction. The auction results will also be discussed with the stakeholder consultation committee.
(e) If the highest bidder is found ineligible, the second-highest bidder will be considered, in consultation with the stakeholder consultation committee.
(2) To improve accountability and avoid regulatory oversight, a final report must be submitted to the adjudicating authority if a scheme of compromise or arrangement is approved.
(3) The IBBI will continue the use of a separate bank account for liquidations, as it is efficient and expeditious in processing claims and overall fund management.
(4) Voluntary liquidation can be completed even with uncalled or unpaid capital as adequate safeguards are in place for creditors. This would also avoid delays.
(5) Details of a liquidation must be submitted in electronic forms, and a delay will attract a late fee of INR500 (USD5). Late fees will be imposed from a future date yet to be notified.
(6) The liquidator will provide detailed disclosure of tax deductions before depositing unclaimed dividends and undistributed proceeds into the IBBI bank account. Forms have been updated to include the additional information required.
