IBBI amends CIRP and FAST Track Regulations: intends to protect interest of stakeholders

09.10.2017

Vallari Dubey

resolution@vinodkothari.com

IBBI has amended INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2017[1] (“CIRP Regulations”) and INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (FAST TRACK INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2017[2] (“Fast Track Regulations”) vide its notification dated 5^th October, 2017. The same shall be effective immediately.

Amendment to CIRP Regulations

Following new sub-regulation (1A) shall be added in Regulation 38:

“(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor.”

Amendment to Fast Track Regulations

Following new sub-regulation (1A) shall be added in Regulation 37:

“(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor.”

Analysis

Regulation 38[3] pertains to Mandatory contents of the resolution plan. Accordingly, a resolution plan shall have a specified list of disclosures and contents as per the Regulation. A resolution plan for an indebted entity should address the basic criteria of effective payment structure. The idea of the new amendment seems to be to justify as to how a resolution plan is suiting the requirements of the entity and how it is protecting the interests of stakeholders, especially the financial and operational creditors of the corporate person. The new inclusion of sub-regulation (1A) shall ensure greater transparency and increased protection of the interest of stakeholders.

[1] http://www.ibbi.gov.in/CIRP_amndmt_5_oct_2017-10-07_21-32-33.pdf

[2] http://www.ibbi.gov.in/Fast_Track_amndmt_5_oct_2017-10-07_21-31-30.pdf

[3] http://ibbi.gov.in/webadmin/pdf/legalframwork/2017/Sep/Insolvency%20and%20Bankruptcy%20Board%20of%20India%20(Insolvency%20Resolution%20Process%20for%20Corporate%20Persons)%20Regulations,%202016%20(Amended)_2017-09-25%2014:22:35.pdf