IBBI amends regulations pertaining to liquidation process, information utilities

A liquidator shall attempt to sell the assets at the first instance, failing which he may assign or transfer an asset to any person, in consultation with the stakeholders' consultation committee. Among other changes, information utilities have to disseminate a public announcement to its registered users, who are creditors of the corporate debtor undergoing insolvency proceedings.

The Insolvency and Bankruptcy Board of India (IBBI) has made changes to certain regulations pertaining to liquidation process, information utilities and resolution process for corporates. In order to facilitate faster completion of liquidation process, the liquidator concerned has been been allowed to transfer a 'not readily realisable asset' to any other person after consultations with stakeholders' consultation committee.

'Not readily realisable asset' means any asset included in the liquidation estate which could not be sold through available options. It can include contingent or disputed assets, and assets underlying proceedings for preferential, undervalued, extortionate credit and fraudulent transactions. A liquidator shall attempt to sell the assets at the first instance, failing which he may assign or transfer an asset to any person, in consultation with the stakeholders' consultation committee. If that also fails, then the liquidator may distribute the undisposed assets amongst stakeholders with the approval of the adjudicating authority, according to the IBBI.

As per the amendments, which came into effect last week, a creditor can assign or transfer the debt due to it to any other person in accordance with the laws for the time being in force dealing with such assignment or transfer. Among other changes, information utilities have to disseminate a public announcement to its registered users, who are creditors of the corporate debtor undergoing insolvency proceedings. This requirement is in addition to publishing the public announcement in the newspapers and websites.

For financial creditors seeking to initiate insolvency proceedings against a corporate debtor, the IBBI has specified two other 'record or evidence of default'. These are 'certified copy of entries in the relevant account in the bankers' book' and 'order of a court or tribunal that has adjudicated upon the non-payment of a debt'. IBBI is a key institution in implementing the Insolvency and Bankruptcy Code.