IBBI Regulations on the Fast-track Corporate Insolvency Resolution Process, 2017

Providing a procedural framework for ‘fast-track’ insolvency resolution of certain corporate persons

The Insolvency and Bankruptcy Code, 2016 (Code) originally provided an outer time-limit of 270 days for completion of the corporate insolvency resolution process. However, recognizing that it would be value-destructive for certain debtors to undergo prolonged insolvency proceedings, the Bankruptcy Law Reforms Committee had recommended a significantly shorter time-period for the conclusion of the corporate insolvency resolution process for debtors with simpler debt structures or a relatively smaller scale of operations. Based on this recommendation, the Code contains a separate chapter titled ‘Fast Track Corporate Insolvency Resolution Process’, which mandates a shorter time-line of 90 days, which may be extended for a further period of 45 days, for insolvency resolution of eligible corporate debtors. The Central Government is empowered to notify the classes of corporate debtors, on the basis of their asset size and level of income, debt structure or any other additional factors, to whom this Chapter would apply. Accordingly, the Central Government, vide a notification dated June 14, 2017, has notified following classes of corporate debtors that would be eligible to avail the provisions of this Chapter: (i) start-ups (other than partnership firms), (ii) unlisted companies with total assets not exceeding Rs. 1 crore, and (iii) small companies (as defined under Companies Act, 2013). 
To implement the Chapter on ‘Fast Track Corporate Insolvency Resolution Process’, the IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 was drawn up, which provide a detailed framework for conducting a fast-track corporate insolvency resolution process under the Code.