In order to improve transparency in the insolvency process, IBBI has modified the regulations for corporate insolvency proceedings in which a resolution professional will be required to provide details about their opinion on evasion transactions related to a corporate debtor.
The Bankruptcy and Insolvency Board of India (IBBI) has amended the Regulations of the Bankruptcy and Insolvency Board of India (Insolvency Resolution Process for Corporate Persons).
An official statement on Wednesday said the amendments to the regulations are aimed at improving “discipline, transparency and accountability in corporate insolvency proceedings.”
A resolution professional is required to find out whether a Corporate Debtor (CD) has been subject to evasion transactions, namely preferential transactions, undervalued transactions, extorted credit transactions, fraudulent trade and illicit trade, and to submit applications to the authority adjudicator seeking appropriate relief.
This not only recovers the value lost in such transactions by increasing the possibility of reorganization of the CD through a resolution plan, but also discourages such transactions by avoiding stress on the CD.
“For effective monitoring, the amendment requires the PR to submit CIRP Form 8 on the Board’s electronic platform, giving details of their opinion and determination regarding evasion transactions,” the statement said.
The IBBI has published the format of the CIRP 8 form and it must be submitted with respect to each CIRP in progress or starting on July 14.
With the amended regulations, an insolvency professional conducting CIRP will also have to disclose all previous names and registered office addresses that have changed in the two years prior to the commencement of insolvency along with the current name and address. of the CD’s registered office, in all its communications and records.
CIRP refers to the corporate insolvency resolution process.
The amendment takes into account the possibility that a CD may have changed its name or the address of the registered office before the start of the insolvency process. In such cases, interested parties may find it difficult to relate to the new name or address of the registered office and consequently not participate in the CIRP.
Under the insolvency regulations, an interim resolution professional or a resolution professional may appoint any professional, including registered appraisers, to assist them in the performance of their duties in conducting the CIRP.
“The amendment provides that the IRP / RP may appoint a professional, other than registered appraisers, if it believes that such professional’s services are necessary and such services are not available with the CD.
“These appointments will be made under arm’s length conditions following an objective and transparent process. The invoice for fees will be raised in the name of the professional and will be paid into his bank account,” the statement read.
The amendments went into effect on July 14.
The IBBI is a key institution in the implementation of the Insolvency and Bankruptcy Code (IBC).
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