Insolvency and Bankruptcy Board of India (“IBBI”) vide Gazette Notification No. S.O. 4126 (E) dated 15 November 2019, notified the effective date as 1st December 2019, for the following sections of the Insolvency and Bankruptcy Code, 2016 (“IBC”):
||Details of the Section
||Applicability of the IBC to personal guarantors to corporate debtors
||Part-III applicable to insolvency resolution and bankruptcy for individuals and partnership firms (except fresh start)
||Definitions with regard to Part-III i.e., process for insolvency resolution and bankruptcy for individuals and partnership firms
|94 to 187
- Chapter-III of Part-II i.e., insolvency resolution for individuals and partnership firms (Sections 94 to 121)
- Chapter-IV of Part-III i.e., bankruptcy order for individuals and partnership firms (sections 122 to 148)
- Chapter-V of Part-III i.e., administration of estate of bankrupt (sections 149 to 178)
- Chapter-VI of Part-III i.e., adjudicating authority for individuals and partnership firms (sections 179 to 183)
- Chapter-VII of Part-III, i.e., offences and penalties (Section 184)
|239(2)(g) to 239(2)(i)
||Power of Government to frame rules under section 79
|239(2)(m) to 239(2)(zc)
||Framing of rules for the process of insolvency resolution and bankruptcy
||Amendment of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 per the manner specified in Fifth Schedule.
Further the IBBI vide Gazette Notification No. G.S.R. 855(E) dated 15 November 2019, notified the Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, effective from 1 December 2019, wherein, inter-alia, below compliance are provided:
- Application to initiate bankruptcy of an individual or partnership firm to be submitted in Form-A by debtor/guarantor and in Form-B by creditor
- Formats of public notice to be in Form-C and notice to creditors in Form-D
- Intimation of bankruptcy process to any commercial or financial transaction of value of INR 1 (one) Lakh and above by the individual/partnership-firm undergoing bankruptcy
Please refer to our earlier regulatory updates on the process of insolvency here and the process of bankruptcy here.
Insolvency and Bankruptcy Board of India (“IBBI”) vide Gazette Notification dated November 20, 2019, notified the Insolvency and Bankruptcy Board of India (Insolvency Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, inter-alia, providing below compliance:
- Appointment of resolution profession
- Procedure for a creditor to submit claim for registration
- Procedure for meeting of creditors
- Contents of repayment plan and filing this plan before Adjudicating Authority
Insolvency and Bankruptcy Board of India (“IBBI”) vide Gazette Notification dated November 20, 2019, notified the Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, inter-alia, providing below compliance:
- Appointment of insolvency professional as bankruptcy trustee
- Appointment of professionals by bankruptcy trustee
- Submission of reports and maintenance of registers by bankruptcy trustee
- Submission of quarterly progress report to Adjudicating Authority
- Process for future claims by creditors
- Process for bankruptcy trustee to convene meeting for voting
- Process for asset realization & proceeds distribution
With an aim to complete an insolvency petition even faster, in 90 days, for small companies, companies where there are not a lot of transactions / operations, the Insolvency and Bankruptcy Board of India has notified the sections 55 to 58 of the Insolvency and Bankruptcy Code 2016 and the draft of Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 with effect from 14 June 2017.
It is believed that these regulations help in faster and easier completion of bankruptcy proceedings.
The fast track process applies to the following categories of corporate debtors:
- a small company, as defined under clause (85) of section 2 of the Companies Act, 2013;
- a Startup (other than the partnership firm), as defined in the notification dated 23 May 2017 of the Ministry of Commerce and Industry;
- an unlisted company with total assets, as reported in the financial statement of the immediately preceding financial year, not exceeding Rs.1 crore.
The criteria for an Insolvency Resolution Professional (IRP) are:
- An insolvency professional can be resolution professional if he, all his partners and directors are independent of the corporate debtor.
- Not eligible if he or the insolvency professional entity of which he is a partner or director,is under a restraint order of the Board.
- Shall not continue as resolution professional of he or entity where he is director or partner or any other of his director or partner represents any other stakeholders in the same fast track process.
The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 also provides that if committee thinks that fast track process cannot be completed within 90 days then it may instruct the resolution professional to make an application to the Adjudicating Authority. However, the Adjudicating Authority may, if satisfied, extend the period of 90 days by a further period up to 45 days for completion of the process.
Further, Interim Resolution Professional (IRP) shall file a report certifying constitution of committee to Adjudicating Authority before expiry of 21 days from the date of his appointment. Based on records, if interim resolution professional is of opinion that fast track process is not applicable to corporate debtor, he shall file an application to Adjudicating Authority along with the report to pass an order converting the fast track process to corporate insolvency resolution process. If Adjudicating Authority passes on order of such conversion, the process shall be carried on in accordance with Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.