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Forced Contributions to Infructuous Liquidations: Understanding Regulation 2A

-Megha Mittal

(resolution@vinodkothari.com)

Since its inception, the Insolvency and Bankruptcy Code, 2016 (“Code”), along with its regulations, has been subject to many reforms, some aimed at establishing new legal principles and some for removing difficulties faced during the insolvency resolution and/ or liquidation process; one such reform was the introduction of Regulation 2A[1] in the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”), which provides for contribution by financial creditors of the corporate debtor to contribute towards liquidation costs, if so called upon by the liquidator.

In this article, we shall briefly understand the backdrop in which the said provision was introduced, throw light upon the extant provisions and then address the elephant in the room- is it obligatory upon the financial creditors to make such contribution when sought by the liquidator?

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Timely Realisation of Assets by Secured Creditors- IBBI’s Discussion Paper on Liquidation Process Regulations

-Megha Mittal

(resolution@vinodkothari.com

The Insolvency and Bankruptcy Board of India (“IBBI”/ “Board”) has invited comments on its Discussion Paper on Corporate Liquidation Process[1], dated 03.11.2019 (“Discussion Paper”), which essentially deals with two issues which have been the focal point of contrasting opinions as well as judicial interpretation at various instances, i.e. (a) Relinquishment of Security Interest in Corporate Liquidation Process; and (b) Applicability of section 29A of the Code to Compromise and Arrangement.

In this article, the author has delved into the said issues based on the problem statement presented by the Board, and has also attempted to analyse the propose amendments in the Insolvency and Bankruptcy Code, 2016 (“Code”) w.r.t. relinquishment of security interest in corporate liquidation.

We shall discuss the applicability of section 29A of the Code to Compromise and Arrangement in a separate article.

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