Other BriefingsIBBI Streamlines and Fast-Tracks the Voluntary Liquidation Process
On April 5, 2022, IBBI, India’s key implementing agency for the Insolvency and Bankruptcy Code, amended the voluntary liquidation process, making it investor friendly through reduced timelines as well as introduction of a compliance certificate. In this article, we highlight the key amendments introduced by the insolvency board.
The Insolvency and Bankruptcy Board of India (IBBI), the apex regulatory body for implementing the Insolvency and Bankruptcy Code (IBC), has introduced various changes to streamline and fast track the voluntary liquidation process.
The amendment ensures that the idle assets are released expeditiously for better productive uses without substantial value erosion.
On April 5, 2022, IBBI notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2022 to amend the 2017 Regulations. Additionally, it also introduced a compliance certificate – Form H.
Key amendments to the voluntary liquidation process
Term “corporate debtor” substituted with “corporate person”
As per the amendment in Regulation 10(2)(r), the word “corporate debtor” is substituted with “corporate person”. The liquidator shall maintain such other books or registers as may be necessary to account for transactions entered into by them concerning the corporate person.
Reduction in the timeline for preparation of the list of stakeholders if no claims are received
As per the amendment in Regulation 30 (2), a new clause has been inserted where the liquidator shall prepare the list of stakeholders within 15 days from the last date for receipt of claims, in case no claim from creditors has been received.
Reduction in the timeline for distribution of the proceeds from realization
Regulation 35(1) has been amended to reduce the time period for distribution of proceeds from realization to the stakeholders from the current six months to 30 days from the receipt of the amount.
Reduction in time taken for completion of liquidation process
Regulation 37(1) has been amended to reduce the time frame for completion of the voluntary liquidation process and submission of the final report from the initial one year to:
- 270 days from the date of the initiation of the process – in cases where claims have been received from creditors.
- 90 days in cases where no claims have been received from any creditor.
This amendment has enhanced the freedom of exit for corporates, furthering the ease of doing business in India.
Introduction of compliance certificate – Form H
As per Regulation 38(3), the liquidator shall submit the final report and the compliance certificate in Form-H.
Increase in time limit for intimation of appointment as liquidator to IBBI
Regulation 5(2) has been amended to increase the time limit for intimating the IBBI about the appointment of the insolvency professional as a liquidator from the earlier three days to now seven days.
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