IBBI AMENDS INSOLVENCY RESOLUTION PROCESS REGULATIONS
The IBBI made the following amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“Insolvency Resolution Process Regulations”) on August 7, 2020:
Authorised Representative from the State or Union Territory having highest number of creditors in class
- The three Insolvency Professionals offered by the interim resolution professional to be voted upon by the class of creditors, must be from the State or Union Territory, which has the highest number of creditors in the class as per records of the corporate debtor.
Where such State or Union Territory does not have adequate number of insolvency professionals, the insolvency professionals having addresses in a nearby State or Union Territory, as the case may be, shall be considered.
Preliminary Views and Voting Instructions – Authorised Representative (‘AR’)
- After circulation of agenda, the AR may seek preliminary views from the class of creditors on any item in the agenda so as to effectively participate in the meeting. However, these preliminary views shall not be equated to voting instructions.
As an effect of this amendment, the AR shall now seek voting instructions only after circulation of minutes of meeting and vote accordingly.
- The CoC shall evaluate the resolution plans as per evaluation matrix, record its deliberations on feasibility and viability of each resolution plan and vote on all such compliant resolution plans simultaneously
- The resolution plan which receives the highest votes (not less than 66%) shall be considered as approved
- Where two or more plans receive equal votes, then the CoC may approve any one of them using the tie-breaker formula which shall be announced before such voting.
Where none of the plans received requisite votes, i.e. 66%, then the CoC shall vote again on the resolution plan that received highest votes.
The above amendments to the Insolvency Resolution Process Regulations will help in uniformity in the practices adopted by Insolvency Professionals for selection of and voting by Authorised Representatives and voting on resolution plans by CoC. These amendments are effective from August 7, 2020.
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Mr Prakul Thadi is a Company Secretary and Cost Accountant and holds a Masters degree in Law. He co-founded VirtuaLaw in 2017 and is currently the Chief-Editor of the blog at VirtuaLaw. After having gained an industry experience of 3 years he’s currently pursuing Graduate Insolvency Programme (GIP) at the Indian Institute of Corporate Affairs (IICA), Manesar. His interests spread across varied fields of law and majorly corporate laws.