NEW DELHI: The Insolvency and Bankruptcy Board of India (IBBI) has amended its rule which allows better transparency and empowers resolution professionals (RPs) to hire the services of professionals to help with complex resolution processes.
The amendment has also made RPs responsible for finding out if a corporate debtor (CD) has been subject to preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent or wrongful trading, and file applications in a time-bound manner with the adjudicating authority seeking appropriate relief.
“This not only claws back the value lost in such transactions increasing the possibility of reorganisation of the CD through a resolution plan, but also disincentivises such transactions preventing stress to the CD,” Ministry of Corporate Affairs said in a statement issued on Wednesday.
In addition to that, insolvency professionals (IP) conducting corporate insolvency resolution process now have to disclose all former names and registered office address so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the CD, in all its communications and records.
As far as the appointment of professionals in the resolution process is concerned, the invoice for fee shall be raised in the name of the professional and be paid into his bank account. The IBBI has specified the format of CIRP 8 through a circular issued on Tuesday. This Form needs to be filed in respect of every CIRP ongoing or commencing on or after July 14, 2021, the ministry says.
The ministry added that the amendment regulations would enhance the discipline, transparency, and accountability in corporate insolvency proceedings. Earlier IBBI ruled that resolution professionals hired by lenders to rescue bankrupt companies cannot continue in that role if any of their colleagues represent any of the parties in that case.