IBBI amends norms of the liquidation process
Now, liquidators are required to convene meetings of the Stakeholders' Consultation Committee (SCC) at an interval of maximum 30 days and the frequency of the meetings can be reduced subject to certain conditions
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New Delhi: The Insolvency and Bankruptcy Board of India (IBBI) has amended norms pertaining to the liquidation process as part of efforts to make the process more smooth and ensure accountability among the stakeholders. Now, liquidators are required to convene meetings of the Stakeholders' Consultation Committee (SCC) at an interval of maximum 30 days and the frequency of the meetings can be reduced subject to certain conditions. At every SCC meeting, liquidators have to present a comprehensive report that includes details about the progress made in the liquidation process, IBBI said in a release on Tuesday.
Among the key amendments, the liquidator can reduce the reserve price by up to 25 per cent for assets with existing valuation of the Corporate Insolvency Resolution Process (CIRP) once during the liquidation process, provided it is approved by SCC. In the case of assets where fresh valuation is conducted during liquidation, the reserve price can be reduced by up to 10 per cent in subsequent auctions with SCC's nod.
After prior consultation with SCC, the liquidator can sell assets of the corporate debtor by way of private sale. "Further, the option for the private sale of an asset, i.e., ‘the asset is sold at a price higher than the reserve price of a failed auction' by the liquidator, has been removed," IBBI said.
According to the regulator, liquidators must consult SCC, presenting the economic rationale before initiating or continuing any legal proceedings. Before applying for early dissolution, a liquidator must seek SCC's views and recommendations, providing a detailed report in the application to the adjudicating authority.
Further, IBBI said a liquidator can file the proposal of compromise or arrangement only in cases where the Committee of Creditors has made such a recommendation during the CIRP. Such a proposal cannot be filed after the expiry of 30 days from liquidation commencement date, as per the amended norms. The amended Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 has come into effect from February 12. IBBI is a key institution in implementing the Insolvency and Bankruptcy Code (IBC).
