Insolvency and Bankruptcy Code, 2016 Amendments

The Insolvency and Bankruptcy Board of India (IBBI) has proposed several amendments to the Insolvency and Bankruptcy Code, 2016 (IBC) regulations. These changes aim to streamline insolvency processes, especially in complex corporate structures.

Concurrent Resolution Plans

• The new proposal allows resolution professionals (RPs) to invite resolution plans for both the entire company and its specific assets concurrently.
• Currently, RPs can only seek asset-specific plans if resolutions for the whole corporate debtor fail.

Group Insolvency Framework

• The proposal introduces a regulated mechanism for coordinating Corporate Insolvency Resolution Processes (CIRPs) across interconnected entities.
• This approach targets sectors like real estate and power generation with complex intertwined operations.
  • Examples like Videocon Industries Ltd highlight the need for a sophisticated approach.

Suggested Improvements

• Joint hearings, common resolution professionals, and coordinated timelines are suggested.
• Aims to reduce inefficiencies, cost escalations, and conflicts.

Committee of Creditors’ Role

• Mandatory presentation of all resolution plans to the Committee of Creditors (CoC), with a compliance report from RPs.
• Concerns about CoCs micro-managing and potential power imbalances between CoCs and RPs.

Moratorium and Operational Expenses

• Incorrect application of moratorium noted, with recommendations for reviews of significant expenses, especially leased properties.

Interim Financing

• Proposes allowing CoCs to invite interim finance providers to meetings as observers.
• Aims to enhance transparency, risk assessment, and encourage participation from interim financiers.