The Insolvency and Bankruptcy Board of India has made significant changes to the liquidation process with the aim of reducing the time taken for such proceedings.
IBBI is the agency responsible for implementing the Insolvency and Bankruptcy Act, 2016, and establishes regulations for the insolvency resolution process.
The amendments introduced by the Board of Directors are intended to simplify the liquidation process by reducing delays and helping to achieve better value for the entity being liquidated.
The main changes include:
CoC acts as an SCC for the first 60 days
The Creditors Committee is now allowed to act as a stakeholder advisory committee for the first 60 days of liquidation.
Once the claims are decided and accepted, the stakeholder committee will be reconstituted based on the accepted claim for liquidation proceedings.
Earlier, the Saudi Cable Company was appointed within 60 days of the start of the liquidation during which the liquidator made important decisions without guidance from the Saudi Cable Company.
The functions of the SCC have also been increased under the new amendments, raising it to a position closer to that of the Creditors Committee.
Piyush Mishra, partner at Luthra and Luthra Law Firms, says the amendment brings the liquidation process along similar lines to those of the insolvency resolution process and democratizes it.
Mishra said a more transparent and consultative process had been achieved.