Comments on IBBI Discussion Paper on Streamlining the Liquidation Process

Team Resolution |

The Insolvency and Bankruptcy Board of India (‘IBBI’/ ‘Board’) issued Discussion Paper on Corporate Liquidation Process, dated 14th June, 2022 [1](‘Discussion Paper’) which envisages -(a) Streamlining the constitution of SCC (b) Expanding power of SCC; (c) Relinquishment of security interest by the Secured Financial Creditors; (d) Reduction of timeline of compromise or arrangement process; (e) Clarification regarding submission of progress reports to Board; (f) Event based timelines of Auction; (g) timeline for successive auction, (h) treatment of avoidance application before closure of liquidation process, and (i) consideration of claims submitted during CIRP, and the Board has solicited comments of the same.

Following are our general and specific comments on the proposals made in the Discussion Paper and other aspects of liquidation processes –

A.    General Comments

The following are our general comments/suggestions on the proposals made in the Discussion Paper:

1. The general suggestions with respect to various issues faced by liquidators and suggested solutions are as listed below:

1.1. Lightening litigation burden

1.1.1. Infrastructure issues – NCLTs need to be strengthened in terms of benches and bench members;

1.1.2 Continuing engagement with professionals as quite often there are serious gaps in alignment

1.1.3. NCLT members to have strong incentive for better time management

1.1.4. De-clogging NCLTs

a. Remove operational creditors’ claim beyond a hard timeline

b. Move extension application or other matters not requiring adjudication from the domain of NCLTs

c. Create expert advisory cell in IBBI/IPA (similar to informal guidance scheme of SEBI), which the IPs can approach for clarifications/interpretations pertaining to law

d. Identify other non-adjudicative matters, not need exercise of judicial discretion, and move them out of NCLTs

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Takeaways from Budget 2022-23 – Fast Track Exit for Companies

By Shaivi Bhamaria – Associate, []


Over the past few years the Government of India has been increasingly focusing on ‘ease of doing business’ by corporates, and has taken several initiatives towards the same, such as exemption to private companies from the requirement of minimum paid up capital by way of the Companies (Amendment) Act, 2015; establishment to the Central Registration Centre (‘CRC’) under section 396 of the Companies Act, 2013 (‘CA, 2013’) for providing speedy incorporation related services; launch of the integrated web form SPICe+ and integration of the MCA21 system with the CBDT for issue of PAN and TAN to a company incorporated using SPICe+; launch of  web based service R.U.N. (Reserve Unique Name) for reserving a name for a new company, etc..

However, the term ‘ease of doing business’ includes not only a seamless start to a business or making the journey less cumbersome, but also involves the ease of exit. While there are various modes of exit available to corporates,  such as winding up, summary liquidation, mergers and amalgamations etc[1], given that in voluntary modes of exit like striking off or voluntary liquidation under IBC, the company is either solvent enough to meet its liabilities or holds nil assets and liabilities, ideally, the closure processes is expected to be fast and simple, However, it has been observed that these voluntary modes have not been essentially ‘easy’ given the significant delays associated with them.

It is in the backdrop of such delays, the Union Budget, 2022-23[2] has proposed certain reforms, specifically for speeding up the striking off process under section 248 (2) of the Companies Act. Further, the Insolvency and Bankruptcy Board of India (‘IBBI’) has issued a Discussion Paper dated 1st February, 2022[3] proposing amendments in the IBBI (Voluntary Liquidation) Regulations, 2016, for ensuring a faster closure of voluntary liquidation processes.

In this write up, the author discusses the two sets of proposed reforms as mentioned above, and attempts to gauge their effectiveness at present and post implementation of the proposed amendments. Read more

Comments on proposed changes to the Corporate Insolvency Resolution and Liquidation Framework under Insolvency and Bankruptcy Code, 2016

– Team Resolution (

On 23rd December, 2021, the Ministry of Corporate Affairs has issued proposed changes to the Corporate Insolvency Resolution and Liquidation Framework under Insolvency and Bankruptcy Code, 2016[1] and has solicited comments on the same.

While we discuss the proposed amendments in details below, a bird’s eye view of the proposed amendments gives an indication towards a more creditor-friendly approach, wherein the creditors have been bestowed with extended powers such as right to initiate insolvency proceedings, as well as have become less burdened with the the proposed amendment of only producing IU records at the time of application. At the same time, the roles and responsibilities of the RPs/liquidators seem to have been further widened by making RPs and liquidators also responsible for investigation of avoidance proceedings.

Other ancillary amendments like commencement of look-back back period, timeliness in approval of resolutions plans follow the trend of making the resolution process free of loopholes as and when they are identified.

Below we discuss the proposed amendments in detail –

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Assessing the Viability of a Gold Spot Exchange in India

-Megha Mittal 


The Securities and Exchange Board of India (‘SEBI’) has issued a consultation paper dated 19th May, 2021, on proposed framework for Gold Exchange in India and draft SEBI (Vault Managers) Regulations, 2021 (‘Consultation Paper’), thereby seeking public comments on the framework for operationalising gold exchange and the regulation of intermediaries inter-alia Vault Managers.

While the idea of setting up a regulated gold exchange was highlighted in the Union Budget 2018-19 as well as in the Budget 2021-22, the Consultation Paper comes as the first concrete step towards bringing into operation a gold exchange for the Indian market. This comes in the backdrop of the fact that despite being the second largest consumer and importer of gold, India continues to be a price-taker – India does not play any significant role in influencing the global price-setting for the commodity. As such, the Consultation Paper envisages an entire ecosystem of trading and physical delivery of gold so as to create a transparent and robust market which paves the way for India to become a global price setter.

That being said, before delving into the procedural aspect, it is important to understand the fundamentals as to what are the objectives being aimed, what would the target market look like, and if at all the proposed framework would put the investors, the parties and the nation in a better place that is today.

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Comments on Discussion Paper on Corporate Liquidation Process

-Resolution Division 


The Insolvency and Bankruptcy Board of India (‘IBBI’/ ‘Board’) issued Discussion Paper on Corporate Liquidation Process, dated 26th August, 2020 (‘DP’)[1] which envisages the introduction of (a) Assignment of Not Readily Realisable Assets (‘NRRA’) and (b) Assignment of Claims/ Interests.

Herein below we put forth our general and specific comments/ suggestions on the DP-

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Forced Contributions to Infructuous Liquidations: Understanding Regulation 2A

-Megha Mittal


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


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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