New Delhi: To ease the compliance burden for insolvency professionals, and enhance the effectiveness of the liquidation process, the IBBI has launched a set of electronic forms under the Insolvency and Bankruptcy Code. These forms are crucial for the liquidation process under the Insolvency and Bankruptcy Code (IBC), as they facilitate systematic and transparent record-keeping and seamless reporting, the insolvency regulator said. The new circular, issued by the Insolvency and Bankruptcy Board of India (IBBI) on June 28, introduces forms LIQ 1 to LIQ 4, covering different stages of the liquidation process.

Presently, the IPs submit the details regarding the liquidation process, to the board through emails, which is time-consuming and inefficient, the IBBI said in the circular. LIQ 1 includes details from the commencement of liquidation to the public announcement. Further, LIQ 2 captures information from the public announcement to the progress report, including valuation, sale, and receipts. LIQ 3 focuses on the period from the last progress report to the application for dissolution, while LIQ 4 deals with the distribution of proceeds and other final details post-dissolution order.

For instance, LIQ 1 must be filed on or before the 10th day of the subsequent month after a public announcement, and LIQ 4 within 14 days of the passing of the dissolution order. This will minimize the errors and omissions, providing more reliable information and facilitating smoother liquidation processes. The IBBI also issued a circular for voluntary liquidation processes under the IBC. Forms VL 1 to VL 4 have been introduced for voluntary liquidation, having details such as the list of stakeholders, sale of assets, and distribution of proceeds. These forms will boost the efficiency of voluntary liquidations, allowing liquidators to submit forms online and reducing the chances of errors.

The insolvency regulator directed that IPs handling ongoing cases must file the required forms by September 30.. This includes cases where no application for dissolution has been filed, cases with a dissolution application, and cases where the voluntary liquidation process has commenced. It is clarified that IPs who do not comply with new norms of the Code and the regulations, will be liable as per the IBC provisions, the regulator said.