New Delhi, Nov 3 (KNN) The Insolvency and Bankruptcy Board of India (IBBI) on Wednesday proposed amendments to regulations to further rationalize corporate resolution process and prevent delay in implementation of the resolution plan.

The key institution implementing the IBC has invited comments from stakeholders on the discussion paper till November 22.

One of the proposals is to structure the corporate resolution plan into two parts — inflow of funds and distribution to various stakeholders — under the Insolvency and Bankruptcy Code (IBC).

Overall the modifications have been proposed to seven areas, including approval of Committee of Creditors (CoC) for insolvency resolution process cost, monthly CoC meetings, discussion of valuation methodology and report with CoC, and disclosure of valuation reports.

Other areas pertain to continuation of process activities pending disposal of extension application by the Adjudicating Authority (AA), clarity in minimum entitlement to dissenting financial creditors and mandatory contents of resolution plan, according to a discussion paper.

The proposal is to streamline the resolutions and prevent delay in the implementation of the resolution plan by structuring the resolution plan into two parts. “Part A of the resolution plan shall deal with the inflow i.e. payment under the resolution plan (total value of the resolution plan), payment of insolvency resolution process cost, payment schedule, feasibility and viability of the resolution plan, etc, while Part B will deal with distribution to various stakeholders,” the discussion paper said.

It also said structuring the resolution plan into two parts will enable the AA to first approve the resolution plan effectuating control by the resolution applicant so that inflow can take place and the Corporate Debtor (CD) may start functioning again.

“The second part shall deal with distribution amongst the various stakeholders. In case of any dispute or litigation the disputed amount may be kept in an escrow account and be distributed after the litigation in respect of distribution attains finality,” the paper said.

Access document here: https://ibbi.gov.in/uploads/whatsnew/b70daeb0fbec8cc61d1afc52e9e9fbb8.pdf

(KNN Bureau)