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Insolvency and Bankruptcy Board of India
The Insolvency and Bankruptcy Board of India (IBBI), in exercise of its powers conferred under section 240 of the Insolvency and Bankruptcy Code, 2016, has notified the following two regulations:
The Insolvency and Bankruptcy Board of India (IBBI), in exercise of its powers conferred under section 240 of the Insolvency and Bankruptcy Code, 2016, has notified the following two regulations:
The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016; and The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016.
These two regulations inter alia provide for the eligibility norms to be a Professional Member of an Insolvency Professional Agency and also for eligibility norms to be registered with the IBBI as an Insolvency Professional Agency.
The Centre had notified the Insolvency and Bankruptcy Code in May. It provides an easy exit option for insolvent and sick companies.
It aims to speedily adjudicate such cases for higher recovery of debt and money; allow operational creditors like employees to also call for insolvency resolution; propose Insolvency Regulator to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities.
The Code seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.
On October 2 this year, the Centre set up a four-member Insolvency and Bankruptcy Board of India (IBBI) under the Chairmanship of MS Sahoo.
The members are Ajay Tyagi, Additional Secretary in Finance Ministry, Amardeep Singh Bhatia, the Joint Secretary (Corporate Affairs), GS Yadav, the Joint Secretary (Legal Affairs) and and Unnikrishnan, Legal Advisor to the RBI. The fact that IBBI has been constituted in a span of four months is a commendable effort.
The Code creates time-bound processes for insolvency resolution of companies and individuals. These processes will be completed within 180 days. If insolvency cannot be resolved, the assets of the borrowers may be sold to repay creditors.
The resolution processes will be conducted by licensed insolvency professionals (IPs). These IPs will be members of insolvency professional agencies (IPAs).
IPAs will also furnish performance bonds equal to the assets of a company under insolvency resolution. The IBBI is to regulate functioning of IPs, IPAs and IUs.
As per the new IBBI notification, a company registered under Section 8 of the Companies Act, 2013 with a minimum net worth of Rs 10 crore shall be eligible to be an Insolvency Professional Agency.
