1. IBBI has invited public comments on draft regulations on Information Utilities
The Insolvency and Bankruptcy Board (IBBI) has sought public comments on the draft norms for information utilities. The fourth working group on bankruptcy set up by the Corporate Affairs Ministry to facilitate implementation of the Code has submitted its report on information utilities which includes draft regulations and proposed amendments to the Code. Information utilities will be playing the role of centralized repositories of financial and credit information of borrowers and they will keep records of the information about firms, and in order to avoid delays in the insolvency resolution process due to lack of data.
The last date for public feedback is 7 February, 2017.
2. IBBI notifies Information Utility Regulations
IBBI on March 31, 2017 has notified Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017. These Regulations have laid down the framework for registration and regulation of information utilities (“IUs”)
As per the Regulations, following are some of the criteria to be eligible for registration as an IU:
- Eligibility criteria and procedure for registration as an IP, conduct of IP Examination, transitional registration from other professions viz. CA, CS etc. to IP, refusal to grant certificate of registration and its effects etc.
- Procedure of making application to the Adjudicating Authority by sole financial creditor, operational creditor, corporate applicant, joint application by two or more financial creditors; demand notice by operational creditors and; appointment of interim resolution professional etc.
- Procedure of Liquidation proceedings, declaration of conflict of interest by liquidators and other persons or professionals, appointment, powers and functions of liquidator, auditing of financial statements and accounts prepared by liquidator as a part of his reports, determination of claims made by creditors, manner of conduct of liquidation property, consultation with stakeholders, treatment and preference of equity shareholders etc.
- IP Agencies to adopt comprehensive bye-laws on the lines of model bye-laws, the Code will have an overriding effect on the model bye-laws of the IP Agencies.
3. IBBI Notifies the Regulations for Liquidation Process
The Insolvency and Bankruptcy Board of India notified the IBBI (Liquidation Process) Regulations, 2016 (“Regulations”) on December 15, 2016.
These Regulations provide the eligibility criteria for liquidators, fee structure of a liquidator, powers and functions of a liquidator, details of procedure for liquidation to be adopted by liquidator, manner of public announcements, receipt and verification of claims of stakeholders/creditors, the manner of realization of assets and security interest, and distribution of proceeds to stakeholders etc.
Some of the noteworthy points of the Regulations are:
- The Regulations prohibit an insolvency professional to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director, are not independent of the corporate debtor.
- A liquidator shall ordinarily sell the assets of the corporate debtor through an auction and private sale would be allowed only if the assets are perishable
- A liquidator shall be entitled to such fees as has been decided by the committee of creditors.
- The Regulations provide that the liquidator shall prepare and submit a preliminary report, progress report, asset memorandum, sale report, minutes of consultation with stakeholders and final report prior to liquidation, with the adjudicating authority i.e. NCLT.
(Disclaimer: Suvan Law Advisors assisted NESL in obtaining registration with IBBI.)