The Insolvency and Bankruptcy Board of India has conferred under section 20 of the Insolvency and Bankruptcy Code 2016, the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
Regulations provide for details of activities from issue of liquidation under Section 33 of the Code to Dissolution order under Section 54.
These Regulations prohibit an insolvency professional from acting as a liquidator for a corporate debtor if he is not independent of the corporate debtor.
These obstruct partners or directors of an insolvency professional entity of which the insolvency professional is a partner or director from representing other stakeholders in the same liquidation process.
These require the liquidator, and also registered valuer (s) and professional(s) assisting him in liquidation to make disclosures - initial and continuing – about pecuniary or personal relationship with any of the stakeholders entitled to distribution of assets.
Regulations provide that a liquidator should ordinarily sell the assets through auctions. He may sell the assets through private sale only when the asset is perishable; the asset is likely to deteriorate in value significantly if not sold immediately or the asset is sold at a price higher than the reserve price of a failed auction. He may sell an asset on standalone basis, or assets in a slump sale, assets in parcels or a set of assets collectively.
These Regulations also provide that the fee payable to a liquidator shall form a part of liquidation cost.
These further provide that a liquidator shall be paid such fees and in such manner as has been decided by the committee of creditors during the resolution process.
In all other cases, the liquidator shall be entitled to a fee as a percentage of the amount realised net of other liquidation costs and of the amount distributed.
Insolvency and Bankruptcy Board of India- The Centre has constituted a four-member Insolvency and Bankruptcy Board of India (IBBI) in Oct 2016.
- Board is under the Chairmanship of MS Sahoo.
The members of the IBBI are:- Ajay Tyagi, Additional Secretary, Finance Ministry
- Amardeep Singh Bhatia, Joint Secretary, Ministry of Corporate Affairs;
- GS Yadav, Joint Secretary, Department of Legal Affairs; and
- Unnikrishnan, Legal Advisor, Reserve Bank of India.
IBBI focuses on regulating:- Insolvency professionals
- Insolvency professional agencies
- Information utilities
- Centre has notified the insolvency code in May.
