IBBI Pushes for Transparency Overhaul in Corporate Insolvency

The IBBI is introducing proposals to mandate the documentation of deliberations about resolution applicants' eligibility under Section 29A of the IBC Code to enhance transparency in insolvency processes. It also suggests mandatory beneficial ownership disclosures under Section 32A and encourages digitalisation of insolvency proceedings for improved efficiency and security.

The Insolvency and Bankruptcy Board of India (IBBI) has proposed new rules to increase transparency in corporate insolvency resolution processes. This includes making it mandatory for the committee of creditors to document discussions on applicants' eligibility under Section 29A of the IBC Code.

Section 29A establishes criteria for ineligibility to submit a resolution plan for a debtor undergoing insolvency, aiming to prevent individuals and entities with a history of defaults or irregularities from acquiring control of struggling companies. The IBBI also calls for these discussions to be recorded in meeting minutes to reduce litigation and strengthen the resolution process.

The IBBI suggests enhanced disclosures regarding beneficial ownership in resolution plans. It proposes to digitalise insolvency proceedings through a secure, centralised platform for handling submissions, following successful trials of a similar system for liquidation auctions. Public feedback on these proposals is invited until August 27.

(With inputs from agencies.)