IBBI plans to reduce delays in voluntary liquidation process

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The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to the regulations governing the voluntary liquidation process to reduce delays, including reducing the period for the liquidator to prepare the list of stakeholders to 15 days. In addition, IBBI is seeking to change the regulations relating to the Certificate of Compliance as part of the voluntary liquidation process.

In this regard, a discussion document has been published and comments from stakeholders have been solicited until February 22.

“The proposed amendments by reducing the undue time spent on various activities are intended to ensure the rapid completion of the voluntary liquidation process, thereby allowing a faster exit from the legal person, freeing up unused resources more quickly and putting them to productive use. “, said IBBI.

In cases where no claim is received from the creditor(s), the deadline for the preparation of the list of stakeholders by the liquidator may be reduced to 15 days from the deadline for receipt of claims, in accordance with the working document .

Another proposal is that the period for distributing the proceeds of realization to stakeholders can be reduced from the current six months to 30 days from receipt of the amount.

According to the working document, the final report in cases where no claim is received from one or more creditors, can be provided within 90 days from the date of the start of the process.

With regard to cases where claims are received from the creditor(s), the working document indicates that the deadline for submitting the final report may be 270 days from the date of the start of the process.

“Therefore, the liquidator must submit the final report, together with the request for dissolution, to the AA (awarding authority) within ninety days or two hundred and seventy days, as the case may be, from the start date of liquidation,” he noted. .

Modeled on the Certificate of Compliance provided under the Corporate Insolvency Resolution Process (CIRP) Regulation and Liquidation Regulation, IBBI stated that it is proposed that a similar Certificate of Compliance / Checklist may be introduced for the process voluntary liquidation, to be submitted with the final report to the AA.

“The proposed amendment would help the AA deal with dissolution requests quickly and ensure consistency among its magistrates. This would facilitate the saving of valuable judicial time and resources and thus reduce the overall burden on the AA.

“…presenting the key details of the voluntary liquidation process in summary form would provide a rich and systemic source of data for analysis by the board/government,” the working paper states.

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