IBBI's Bold Proposals for Insolvency Resolution Revamp

The Insolvency and Bankruptcy Board of India (IBBI) released a discussion paper suggesting various amendments to enhance the operational framework of insolvency resolution. Key proposals include improved coordination for interconnected entities, changes to the Committee of Creditors' decision-making process, and mandatory submission of Statements of Affairs by corporate debtors.

The Insolvency and Bankruptcy Board of India (IBBI) on Tuesday unveiled a discussion paper geared towards overhauling the operational aspects of insolvency resolution. The document emphasizes streamlined processes for interconnected entities and outlines potential amendments to enhance the submission and review of resolution plans.

Among the paper's proposals is the need to bolster the Committee of Creditors' (CoC) decision-making capabilities. This could be achieved by instituting regular assessments of major operational expenses, especially concerning leased properties under moratorium. A comprehensive overview of expenditures must be presented to the CoC within 30 days of its inception.

The IBBI also proposes changes to the resolution plan submission process to augment transparency and mitigate disputes. Notably, all resolution plans would be presented to the CoC with a compliance report. The board recommends restricting alterations to resolution plans after adjudicating authority approval, while other changes focus on improving efficiency and reducing legal uncertainties during liquidation.

(With inputs from agencies.)