IBBI Introduces 2024 Amendments to IRP Regulations, 2016

Bittu Kumar

30 Mar, 2024

The Insolvency and Bankruptcy Board of India (IBBI) issued a notification on 15^th Feb 2024 and issued a press release No. IBBI/PR/2024/09 16th February 2024 to introduce the amendments made to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Key 2024 amendment changes under IBC code, 2016

 In this, we are going to elaborate on the key changes made under IBC regulation through these amendments-

Separate Bank Account for Real Estate Projects (Regulation 4D):

This IBBI amendment mandates if a corporate debtor is engaged or involved with any real estate projects, then the interim resolution professionals or the resolution professional are required to operate a separate bank account for each and every real estate project. IBBI made specific amendments with the intent to ensure transparency and the effective management of funds concerned with any kind of real estate projects during the insolvency proceedings.

Frequency of Committee Meetings (Regulation 18):

This amendment substitutes the timeline for convening committee meetings through an Insolvency resolution professional. Under this specific amendment, it is mandatory that the meeting committee be convened 30 days before its last meeting. Moreover, the committee has the right to decide to extend the time period between these meetings, provided with at least one meeting in each quarter. IBBI made these changes with the intent to streamline the decision-making process at the time of insolvency proceedings.

Electronic Voting System (Regulation 25):

The amendment specifically made new provisions for electronic voting by members who left or did not vote at the meeting on matters listed for voting purposes. Under this recent amendment, the voting window should be open for a specified period to ensure participation and entire decision-making efficiency. It has been allowed the resolution professional with discretionary rights to extend the voting window on the request of creditors, subject to some terms and conditions.  

Approval of Committee for Insolvency Resolution Process Costs (Regulation 31B):

Under this amendment, it is mandatory for the insolvency professional to obtain approval from the concerned committee for all costs incurred as a part of the insolvency resolution process. This specific amendment is made to ensure accountability and transparency to manage the costs associated with the resolution process. 

Valuation Methodology Disclosure (Regulation 35):

Under this amendment, now it is mandatory for resolution professionals to facilitate meetings where the other registered valuers can explain and elaborate the valuation methodology to the concerned committee members prior to the process of estimating values. This amendment is done to promote and encourage understanding and transparency among the concerned members in the entire valuation process. 

Confidentiality of Valuation Reports (Regulation 35):

IBBI, in this amendment, specifically mandates the resolution professional to procure the fair value, liquidation value, and valuation reports to the committee members using electronic methods. Members are advised to maintain confidentiality and comply with the specific requisite requirements in order to prevent the misuse of valuation information.

Non-disclosure of Fair Value (Regulation 36):

This amendment specifically introduced a provision for the committee to decide and not to disclose the fair value within certain circumstances; suppose it seems that such non-disclosure could be beneficial for the entire resolution process. This amendment enhances flexibility in decision-making to optimize the resolution outcomes.

Inviting Resolution Plans for Real Estate Projects (Regulation 36A):

IBBI amendment clarified that after getting committee approval, it is with the resolution professional to invite or call for separate resolution plans for each and every real estate project or group of projects of the corporate debtor. This amendment is made with the intent to facilitate the focused resolution strategies for real estate assets. 

Monitoring Committee (Regulation 38):

The IBBI amendment empowered the committee to consider the requirement of a monitoring committee for the implementation of the resolution plan. If it is required, then the committee is allowed to constitute a monitoring committee in accordance with specified members, which includes the resolution professional or other potential stakeholders. 

Continuation of Responsibilities (Regulation 40):

This IIBI amendment provides clarity that the resolution professional should continue to discharge their responsibilities under the corporate insolvency resolution process till the time of application for extension is duly decided by the Adjudicating Authority. This amendment is made to ensure the continuity and effective management of the entire resolution process. 

Conclusion

IBBI, under this amendment, intends to enhance the effectiveness, transparency, and accountability of the insolvency resolution process specifically for Indian corporate entities. IBBI is more likely to introduce effective measures to streamline the entire decision-making process, enhance fund management, and ensure fair and transparent valuation practices in India, which tends to contribute towards an effective and efficient resolution process for corporate insolvencies. Such amendment is done to enhance the transparency, accountability, and efficiency in the entire corporate insolvency resolution process and made effective on 15^th February 2024. this amendment can be easily availed and accessed on the official IBBI website. www.ibbi.gov.in.