IBBI (Insolvency Resolution Process for Corporate Persons) (2nd Amendment) Regulations, 2019 issued on 25th July, 2019

Insolvency and Bankruptcy Board of India has notified IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2019 on 25th July, 2019. The amendment alters the procedure for application for proving the claims by stakeholders in corporate insolvency resolution process for corporate persons. The amendment also redefines the role of insolvency professionals, committee of creditors and applicant in preparing the resolution plan. 

Following are the significant changes brought by the amendment:

1. The concepts of ‘insolvency resolution costs’ and ‘liquidation costs’ has been expanded. The committee of creditors, while recommending either an insolvency resolution plan or for liquidation of the corporate debtor, is vested with the responsibility to estimate the insolvency resolution costs and the liquidation costs. The liquidation costs shall include the fee of the liquidator for the entire period of liquidation inclusive of period of compromise or arrangement and period of sale of assets. 
2. The committee of creditors shall also calculate the value of the liquid assets of corporate debtor and compare the same with liquidation costs. At the instance of the liquidation cost outweighing the value of the liquid assets, the committee shall further prepare a contribution plan to meet the difference.
3. The amendment redefines the insolvency resolution costs including within its ambit the fees of interim resolution professional, resolution professional, authorised representatives of creditors and amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed. 
4. The amendment mandates the applicant to furnish a bank guarantee along with application enough to cover the insolvency resolution costs as per new standard. The applicant shall deposit the cost in the account of corporate debtor upon approval of the plan.
5. If the application is withdrawn after issue of invitation for expression of interest, the applicant shall state the reasons justifying withdrawal.

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