Insolvency and Bankruptcy

IBBI’s Amendments (No. IBBI/PR/2024/06) to Voluntary Liquidation Process Regulations, 2017

In order to streamline the voluntary liquidation process and prioritize stakeholder’s interests, the relevant Insolvency and Bankruptcy Board of India (IBBI) has announced and made significant amendments to the IBC (Voluntary Liquidation Process) regulations, 2017.

Key Highlights and Changes:

Enhanced Disclosure Requirements:

IBBI made it mandatory for directors initiating the voluntary liquidation to disclose pending proceedings and assessments before the relevant authorities and ongoing litigations. It becomes necessary for directors to declare that sufficient provisions have been made for potential obligations that arise from the pending proceedings.

Timeline Accountability:

Suppose the liquidator fails to comply with the liquidation within a specified time limit of 90 or 270 days; a meeting of contributors must be held. IBBI made it necessary for the liquidator to present a status report with a detailed explanation of the reasons for the delays and must specify the additional time requirement to complete the entire process. 

Stakeholder Fund Access:

Prior to the final submission but before the corporate dissolution, stakeholders with claims to funds in the corporate voluntary Liquidation Account can easily apply for withdrawal. The liquidator should verify the requested claim and make a request accordingly to the Board for the release of funds for distribution.

Effective Date:

The Amendment Regulations came into effect on 31st January 2024 and can easily be accessible on the IBBI official website and MCA website- www.mca.gov.in and www.ibbi.gov.in.

Conclusion

IBBI committed to enhancing the IBC regulatory framework and made amendments to the IBC (Voluntary Liquidation Process) Regulations, 2017, with an intent to develop transparency, efficiency and distribution of assets in a timely manner during the voluntary liquidation process.

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