Report of the IBBI Working Group on Group Insolvency
Designing a framework for facilitating insolvency resolution of group companies
While the Insolvency and Bankruptcy Code, 2016 (Code) provides a detailed framework for dealing with insolvency resolution and liquidation of corporate persons, it does not provide a separate mechanism for dealing with insolvency situations involving multiple entities belonging to the same corporate group.
In light of the experience gained from the insolvency resolution proceedings involving certain group companies, a need was felt to develop a new framework for dealing with resolution of group entities.
Given this, the Insolvency and Bankruptcy Board of India constituted a Working Group for recommending a legal framework for facilitating insolvency resolution and liquidation of corporate debtors belonging to the same group of companies. The Committee released its report in September 2019.
It recommended a mandatory provision for resolution professionals, Adjudicating Authorities and committees of creditors of each group company to cooperate, communicate and share information amongst each other in group insolvency cases. The Report also recommended facilitating joint applications on behalf of two or more group entities and permitting appointment of the same resolution professional and designation of a single Adjudicating Authority for group insolvency cases. Further, it recommended facilitating group coordination proceedings in order to facilitate a comprehensive resolution of multiple group companies in appropriate cases.