IBBI (Process of Voluntary Winding-Up) Regulations (Amendment), 2022 – Insolvency/Bankruptcy/Restructuring
India: IBBI (Voluntary Winding Up Process) Regulations (Amendment), 2022
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Indian Insolvency and Bankruptcy Board (“Plank”) introduced an amendment in the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations 2017 under Notification F. No. IBBI/2022-23/GN/REG.081 dated 5 April 2022.
According to the amendment, the start date of liquidation for corporate bodies (other than an Indian company) shall be calculated from the date of receipt of approval from creditors1where applicable, representing two-thirds in value of the debt of the legal person.
Creditor approval must be taken within 7 days of:
- the adoption of a special majority resolution of the partners or contributors, as the case may be, for the liquidation of the legal person and the appointment of an insolvency practitioner to act as liquidator, or
- resolution taken by the partners or contributors, as the case may be, for the liquidation of the legal person at the end of the period of its duration, if any, fixed by its constitutive documents or on the occurrence of any event provided for in the constitutive documents of the legal person and appointment of an insolvency practitioner to act as liquidator.
Before the amendment, the start date of the liquidation was calculated from the date of receipt of the declaration of the majority of the designated partners, if the legal person was a general partnership with limited liability or natural persons constituting the governing body if they were other legal persons, as the case may be. may declare that the aforementioned persons have made a full investigation of the affairs of the legal person and that this legal person has no debts or that it will be able to pay its debts in full from the proceeds of the assets sold during the liquidation, and that the legal person the person is not liquidated with the aim of defrauding for the opening of the liquidation.
In an effort to reduce delays and simplify the voluntary liquidation process, the Board has also introduced some additional changes under the aforementioned notification. The main changes are as follows:
- The liquidator is required to draw up the list of stakeholders within 15 days from the deadline for receipt of claims, if no claim from the creditor(s) has been received and within 45 days from the deadline receipt of claims, in the case of claims from the creditor(s). Previously, regardless of whether or not the receivables were received, the liquidator had 45 days to draw up the list of stakeholders.
- Proceeds from the realization of assets must now be paid to stakeholders within 30 days of receipt of the amount, as opposed to payment being made within 6 months.
- The time limit for completion of the liquidation process has been reduced from 12 months to 270 days from the start date of the liquidation when the creditors approved the resolution, and to 90 days from the start date of the liquidation where creditor approval is not required.
1 Creditor means any person to whom a debt is owed and includes a financial creditor, operational creditor, secured creditor, unsecured creditor and decree holder.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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