20 Feb 2024
Focus on increasing transparency and supporting real estate sector
On February 15, 2024, the Insolvency and Bankruptcy Board of India (“IBBI”) notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 (“Amendment”). The key features of the amendment are:
Segregated bank accounts for real estate projects: The Amendment mandates the establishment of separate bank accounts for each real estate projects under a corporate debtor, aiming to enhance transparency.
Flexibility in inviting resolution plans in real estate cases: Recognizing the need for a tailored approached, the Amendment clarifies that the resolution professional (“RP”), with prior approval from the Committee of Creditors (“CoC”), may invite a separate resolution plan for each real estate project.
Monthly CoC meetings: The RP has been mandated to conduct monthly CoC meetings.
Approval of insolvency resolution costs: Enhancing CoC oversight, the Amendment necessitates RP to place the operational status of the corporate debtor in each COC meeting and to seek approval for all insolvency resolution process costs.
Transparency in valuation methodology: To mitigate valuation disputes, the Amendment mandates the disclosure of valuation methodologies to CoC members prior to computation of estimates.
Fair value disclosure in information memorandum: The Amendment permits inclusion of the fair value estimate in the information memorandum. However, the CoC may decide to withhold such information if such non-disclosure is beneficial for the resolution process.
Monitoring committee for resolution plan implementation: The Amendment empowers the CoC to establish a monitoring committee to implement the resolution plan. The committee may include the RP, any other insolvency professional or any other person as its members.
Continuation of resolution process pending extension application: The Amendment clarifies that the RP shall continue to discharge his responsibilities under the corporate insolvency resolution process, till the application for extension is decided by the Adjudicating Authority.
On February 15, 2024, the Insolvency and Bankruptcy Board of India (“IBBI”) notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 (“Amendment”). The key features of the amendment are:
Segregated bank accounts for real estate projects: The Amendment mandates the establishment of separate bank accounts for each real estate projects under a corporate debtor, aiming to enhance transparency.
Flexibility in inviting resolution plans in real estate cases: Recognizing the need for a tailored approached, the Amendment clarifies that the resolution professional (“RP”), with prior approval from the Committee of Creditors (“CoC”), may invite a separate resolution plan for each real estate project.
Monthly CoC meetings: The RP has been mandated to conduct monthly CoC meetings.
Approval of insolvency resolution costs: Enhancing CoC oversight, the Amendment necessitates RP to place the operational status of the corporate debtor in each COC meeting and to seek approval for all insolvency resolution process costs.
Transparency in valuation methodology: To mitigate valuation disputes, the Amendment mandates the disclosure of valuation methodologies to CoC members prior to computation of estimates.
Fair value disclosure in information memorandum: The Amendment permits inclusion of the fair value estimate in the information memorandum. However, the CoC may decide to withhold such information if such non-disclosure is beneficial for the resolution process.
Monitoring committee for resolution plan implementation: The Amendment empowers the CoC to establish a monitoring committee to implement the resolution plan. The committee may include the RP, any other insolvency professional or any other person as its members.
Continuation of resolution process pending extension application: The Amendment clarifies that the RP shall continue to discharge his responsibilities under the corporate insolvency resolution process, till the application for extension is decided by the Adjudicating Authority.