IBBI Regulations on Insolvency Resolution of Corporate Persons, 2016
Facilitating insolvency resolution of corporate persons under the Insolvency and Bankruptcy Code
Part II of the Insolvency and Bankruptcy Code, 2016 (Code) provides the framework for resolving insolvency of corporate persons. During a corporate insolvency resolution process, the existing management of the corporate debtor loses its control and an independent insolvency professional is appointed by the Adjudicating Authority who is entrusted to manage the operations of the debtor during the process. Further, to preserve the assets of the debtor and to provide a ‘calm period’ for creditors to collectively negotiate with prospective bidders, a moratorium is put in place till the completion of the process. The Code specifically empowers the financial creditors of a corporate debtor undergoing corporate insolvency resolution process to assess the viability of its business and take key commercial decisions, including approving a suitable resolution plan for resolving its distress.
The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, provide the detailed procedure for conducting a corporate insolvency resolution process. Principally, these regulations lay down the eligibility criteria for appointing resolution professionals, the form and manner of causing a public announcement of initiation of insolvency proceedings, the process of collating and verifying claims filed against the corporate debtor, the process of conducting meetings of the committee of creditors and the procedure for submission of resolution plans by prospective resolution applicants.