The Insolvency and Bankruptcy board of India recently amended the Insolvency and Bankruptcy Board of India Regulations. This is the second amendment. The amendment has made major changes to the voluntary liquidation process.
About the Amendment
The amendment allows the corporate persons to replace the liquidator with another liquidator or insolvency professional to initiate voluntary liquidation process.
Earlier, the corporate personnel appoint insolvency professional to conduct voluntary liquidation process but not change the liquidator in due process. However, there can be situations that require appointment of another resolution professional as liquidator. The situations might arise due to conflicts or inadequate expertise.
The Insolvency and Bankruptcy Code requires interim professional to provide choice of three insolvency professionals in public announcement. The creditors select one of them as their authorized representative. The amendments now say that these three professionals should be from the State or Union Territory that has highest number of creditors according to the record of corporate debtor.
The amendment now makes it necessary for the Committee of Creditors to vote for the resolution. The resolution plan that receives not less than 66% of votes is to be considered as approved.
Insolvency and Bankruptcy Board of India
The IBBI oversees insolvency proceedings, Insolvency Professionals and Insolvency Professional Agencies. It was established in 2016 giving statutory powers under Insolvency and Bankruptcy code. The boards aim at simplifying the process of insolvency and bankruptcy proceedings.
The board handles cases using two tribunals such as Debt Recovery Tribunal and National Company Law Tribunal. The board has 10 members including Law and Corporate Affairs, Ministries of Finance and Corporate affairs and also members from Reserve Bank of India.
Insolvency and Bankruptcy Code
The code simplified Insolvency and Bankruptcy proceedings in India. The code helps to provide necessary relief to the creditors and increase credit supply in the economy.