Micro-consultative mode in liquidation: Will liquidations become more efficient?
[Sikha Bansal is Partner at Vinod Kothari & Company and can be reached at resolution@vinodkothari.com]
This article was first published on IndiaCorpLaw Blog and can be read here
IBBI recently came up with IBBI (Liquidation process) (Second Amendment) Regulations, 2021 (‘Amendment Regulations’) making certain important changes in the provisions pertaining to liquidation process under Insolvency and Bankruptcy Code, 2016 (‘IBC). One important amendment pertains to ‘Stakeholders Consultation Committee’ (‘SCC’) covered under regulation 31A of the IBBI (Liquidation Process) Regulations,2016 (‘Liquidation Regulations’).
The provisions relating to SCC were inserted vide IBBI (Liquidation Process) (Amendment) Regulations, 2019 (‘2019 Amendments’), read with Circular dated 26th August, 2019 (’IBBI Circular’). It required that the liquidator shall constitute an SCC (consisting of representatives of stakeholders entitled to distribution under section 53) within 60 days of the liquidation commencement, to advise the liquidator on the matters relating to sale under regulation 32.
While the obligation of the Liquidator to constitute the SCC within 60 days still remains the same, however, the role of SCC has been enlarged vide the Amendment Regulations, as discussed below –