The IBBI on Friday notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019, and the IBBI (Liquidation Process) (Amendment) Regulations, 2019.
Among other changes, the amendments to the regulations for liquidation process said: "The amendments require completion of liquidation process within one year of its commencement, notwithstanding pendency of applications for avoidance transactions. These provide a model timeline for each task in the liquidation process."
"It also specifies a maximum time of 90 days from the order of liquidation for completion of compromise or arrangement, if any, proposed by the stakeholders under section 230 of the Companies Act, 2013. These will ensure that liquidation process is closed at the earliest."
The amendments also said that the financial creditors should contribute towards the liquidation cost, where the corporate debtor does not have adequate liquid resources to complete the process. Such sharing will be on the basis of the proportion of financial debt owed to them by the corporate debtor. This will be applicable only when the committee of creditors (CoC) is unable to approve a plan for such contribution during corporate insolvency resolution process.
"However, such contribution along with interest at bank rate thereon shall form part of liquidation cost, which is paid in priority," it said. It also provided for constitution of a "Stakeholders' Consultation Committee" with representation from secured financial creditors, unsecured financial creditors, workmen and employees, government, other operational creditors, and shareholder or partners to advice the liquidator on matters relating to sale.
The advice of this committee, however, would not binding on the liquidator, it noted.
The amendments have introduced a comprehensive compliance certificate to be submitted along with the final report to the adjudicating authority.
( With inputs from IANS )