Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, amended

The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 are notified by the Insolvency and Bankruptcy Board of India (IBBI).

 Currently, the Regulations envisage that voting instructions will be sought by the authorized representative from creditors in a class at two stages i.e. before the meeting and after circulation of minutes of the meeting.Post the amendment, voting instructions will be sought by the authorized representative only after circulation of minutes of the meeting. However, so that he can effectively participate in the meeting, he will circulate the agenda and seek preliminary views of creditors in the class before the meeting.

As per the Regulations, all compliant resolution plans will be evaluated as per the evaluation matrix by the committee of creditors and the best will be identified and might be approved by the committee. As per the amendment to the Regulations, the committee of creditors after evaluating all compliant resolution plans as per the evaluation matrix will vote simultaneously on all compliant resolution plans. The resolution plan that gets the highest votes but not less than 66 per cent of voting share will be considered as approved. According to the Insolvency and Bankruptcy Code, 2016, an authorized representative (AR) will be appointed by the Adjudicating Authority to represent financial creditors in a class, such as allottees under a real estate project, in the committee of creditors.

To this effect, an interim resolution professional is required to publicly announce three insolvency professionals (IPs) for the creditors in a class to choose one of them to act as their authorized representative.

According to the amendment, the 3 IPs announced by the interim resolution professional must be from the state or Union Territory that has the highest number of creditors in the class as per the corporate debtor’s records. This is meant to bring ease of communication and coordinationbetween the AR and the creditors in the class represented by him/her.