Daily News Analysis

Insolvency and Bankruptcy Board of India

22nd July, 2021 Economy

Context

  • The Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations.

About the amendment:

  • For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions.

Aim of the amendments:

  • amendments were aimed at enhancing the discipline, transparency, and accountability in corporate insolvency proceedings.

About IBC code:

Year of Enactment

2016

Regulator

Insolvency and Bankruptcy Board of India

·        10 Member Board

·        Has RBI and Government representation

Entities created

·        Insolvency Professional Agencies (IPAs); Insolvency

·        Resolution Professionals (IRPs);

·        Information Utilities

Adjudicators

National Company law tribunal for

·        Corporate entities and LLP etc.

Debt Recovery Tribunal for

·        For non-corporate entities such as individuals, partnership funds etc.

Required Time

·        180 days to resolve insolvency

·        270 days in specific circumstances

Due Sharing ( Sharing of the Proceeds received after liquidation with the different claimants)

·        Cost of Insolvency Process

·        Workers, Secured Creditors

·        Employee Wages

·        Unsecured Creditors

·        Government due

·        Any other remaining debt

(This remains the order of Priority)

About the Different Entities

Information Utilities

·        Process the financial information needed for the bankruptcy process

Insolvency Professional

·        To handle and proceed the bankruptcy process

Insolvency Professional Agencies

·        Provide code of conduct and rules to be followed by Insolvency Professional

 

Achievement of the Code:

  • Admission of the 1322 cases by the National Company Law Tribunal
  • Disposition of the more than 4500 cases at pre-admission stage.
  • Fear in the debtor of proceeding at National Company Law Tribunal leading to timely payment of debt
  • Transparent procedure of the successful completion of debt resolution
  • Enhanced the ease of doing business rank of India
  • Average time taken for the resolution is within 270 days which is significant improvement from 3-4 years taken in earlier days.
  • Improvement in the recovery rates for financial creditors
  • 2017 amendment had allowed the treatment of homebuyers at par with financial creditors thus protecting the interest of homebuyers.