The Insolvency and Bankruptcy Board of India (IBBI) has issued amended notification for the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016, which will be effective from 14 July 2021.
In a release, the ministry of corporate affairs (MCA) says, the amendment regulations would enhance the discipline, transparency, and accountability in corporate insolvency proceedings.
The amendment requires an insolvency professional (IP) conducting corporate insolvency resolution process (CIRP) to disclose all former names and registered office address or addresses so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the corporate debtor (CD), in all its communications and records.
The amendment also provides that the interim resolution professional (IRP) or resolution professional (RP) may appoint a professional, other than registered valuers, if he is of the opinion that the services of such professional are required and such services are not available with the CD. However, such appointments needs to be made on an arm’s length basis following an objective and transparent process and the invoice for fee should be raised in the name of the professional and be paid into his bank account, the ministry says.
According to MCA, the RP is duty bound to find out if a CD has been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the adjudicating authority (AA) seeking appropriate relief.
"This not only claws back the value lost in such transactions increasing the possibility of reorganisation of the CD through a resolution plan, but also disincentivises such transactions preventing stress to the CD," it added.
For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of IBBI, intimating details of his opinion and determination in respect of avoidance transactions. The IBBI has specified the format of CIRP 8 through a circular issued on Tuesday. This Form needs to be filed in respect of every CIRP ongoing or commencing on or after 14 July 2021, the ministry says.