Insolvency and Bankruptcy Board of India (IBBI) has issued a consultation paper proposing tweaks to the corporate insolvency resolution process. The regulator has put forth four specific proposals which are aimed at reducing delays in the IBC process.
In the discussion paper, the insolvency regulator has proposed to impose an obligation on the committee of creditors (COC) to share all the documents they possess on the company with the insolvency resolution professional (IRP). The documents proposed to be covered under this include details of valuation exercises, information on stock audits and relevant extracts from forensic audits.
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“The process timelines are laid out in such a manner that the preparation of the Information Memorandum and the valuation exercise are completed within a prescribed timeline, so that the process of inviting and considering resolution plans can happen subsequently,” said IBBI in the discussion paper. “Lack of information hindering these activities is an avoidable delay and hence strengthening the regime that enables the IP to complete these key milestones is a necessity,”
In the discussion paper, IBBI also proposed to make it mandatory to submit copies of GSTR-1 and GSTR-3B filed by operational creditors as additional documentary evidence in the resolution process. “It is also proposed that the same information may also be submitted as part of the claim documents submitted to the IRP for easier verification and admission,” the discussion paper added.
IBBI also proposed that the CIRP regulations be amended to provide a threshold of 25% difference for appointing a third valuer. In other words, if the valuation report of first valuer and second valuer varies by 25%, a third valuer needs to be appointed. In the current rules, there are no specific thresholds and hence the 25% threshold will provide much more clarity to the industry participants.
