New Amendments to Insolvency and Bankruptcy Code
Dheeraj Kumar 18 Dec 2023

New Amendments to Insolvency and Bankruptcy Code

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021, was a bill proposing an off-the-shelf bankruptcy resolution mechanism for micro, small and medium businesses that passed the House of Representatives.

The Union Cabinet is set to consider a series of new reforms to the Bankruptcy and Bankruptcy Code (IBC) this week, with the idea of ​​introducing legislation in the current parliament, said a person familiar with discussions within the government.

Insolvency and Bankruptcy Law: The IBBI regulator has amended rules allowing, among other things, the sale of one or more assets of a company in bankruptcy proceedings, improving market-based solutions for distressed companies.


Additionally, the Committee of Creditors (CoC) can now consider whether settlements or settlements of corporate debtors can be considered during the liquidation stage.

 The Indian Bankruptcy Board (IBBI) amended the regulations "to maximize the value of resolution" and came into force on 16th September.


By the end of June this year, up to 1,703 Corporate Insolvency Proceedings (CIRPs) had been liquidated.


In the absence of a company-wide resolution plan, the regulator has given the resolution expert and her CoC permission to consider the sale of one or more of the debtor's assets.


Tensioned asset markets and timed settlements are governed by the Insolvency and Bankruptcy Code (IBC).


The amended rule states that one or more CD (Corporate Debtor) assets must be submitted to one or more successful settlement applications who will submit a resolution plan for those assets and provide for the proper disposition of the remaining assets. A resolution plan that involves selling to a third party is also permitted.


Marketing of the corporate debtor's assets may take place. This will contribute to the broader dissemination of information to a wider and more targeted audience of potential resolution applicants due to changes in IBBI rules. Gaurav Gupte, the partner at Cyril Amarchand Mangaldas, said the change will give impetus to better market-driven solutions for bankruptcy resolution.


“This change will ensure that better information about insolvent companies and their assets is provided to the market, including potential resolution applicants, promptly,” he added.

He argues that liquidation professionals must actively seek claims from known creditors (based on the company's books) to provide a clearer picture of debt.


Details of all claims contesting the transaction will be provided to the Resolution Applicant before the submission of the Resolution Plan so that the Applicant can address the plan.


"Third, the information memorandum must contain not only information about the assets but material information that will help assess its going concern status, thereby addressing critical market needs. I have to," he added. As of the end of June this year, more than 1,703 corporate insolvency proceedings (CIRPs) have ended with liquidation orders, according to the IBBI newsletter for the April-June period.

The average duration of these procedures was 428 days.

The total amount sought in these cases was Rs 8.19 lakh while the assets themselves were only worth Rs 0.59 lakh.

Source: Xperts Legal - Best Legal Directory

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