IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Amended upto 20.07.2023)

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2016[^1]

[AMENDED UPTO 20.07.2023]

IBBI/2016-17/GN/REG004. - In exercise of the powers conferred under sections 5, 7, 9, 14, 15, 17, 18, 21, 24, 25, 29, 30, 196 and 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following Regulations, namely-

CHAPTER I

PRELIMINARY

1. Short title and commencement.

• (1) These Regulations may be called the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
• (2) These Regulations shall come into force on 1^st December, 2016.
• (3) These Regulations shall apply to the corporate insolvency resolution process.

2. Definitions.

• (1) In these Regulations, unless the context otherwise requires-
  • (a) “applicant” means the person(s) filing an application under sections 7, 9 or 10, as the case may be;
  • [^2][(aa) “class of creditors” means a class with at least ten financial creditors under clause (b) of sub-section (6A) of section 21 and the expression, “creditors in a class” shall be construed accordingly.]
  • (b) “Code” means the Insolvency and Bankruptcy Code, 2016;
  • (c) “Code of Conduct” means the code of conduct for insolvency professionals as set out in the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016;
  • (d) “committee” means a committee of creditors established under section 21;
  • (e) “corporate insolvency resolution process” means the insolvency resolution process for corporate persons under Chapter II of Part II of the Code;
  • (f) [^3][***]
  • (g) “electronic form” shall have the meaning assigned to it in the Information Technology Act, 2000 (21 of 2000);
  • (h) “electronic means” mean an authorized and secured computer programme which is capable of producing confirmation of sending communication to the participant entitled to receive such communication at the last electronic mail address provided by such participant and keeping record of such communication.
  • [^4][“(ha) “evaluation matrix” means such parameters to be applied and the manner of applying such parameters, as approved by the committee, for consideration of resolution plans for its approval;
  • (hb) “fair value” means the estimated realizable value of the assets of the corporate debtor, if they were to be exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion.]
  • (i) “identification number” means the Limited Liability Partnership Identification Number or the Corporate Identity Number, as the case may be;
  • (j) “insolvency professional entity” means an entity recognised as such under the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016;
  • (k) [^5][“liquidation value” means the estimated realizable value of the assets of the corporate debtor, if the corporate debtor were to be liquidated on the insolvency commencement date.]
  • (l) “participant” means a person entitled to attend a meeting of the committee under section 24 or any other person authorised by the committee to attend the meeting;
  • (m) “registered valuer” means a person registered as such in accordance with the Companies Act, 2013(18 of 2013) and rules made thereunder;
  • (n) “[^6][Schedule-I ]” means the [^7][Schedule-I ]to these Regulations;
  • (o) “section” means section of the Code;
  • (p) “video conferencing or other audio and visual means” means such audio and visual facility which enables the participants in a meeting to communicate concurrently with one another and to participate effectively in the meeting.
• (2) Unless the context otherwise requires, words and expressions used and not defined in these Regulations, but defined in the Code, shall have the meanings assigned to them in the Code.

[^8][2A. Record or evidence of default by financial creditor.

For the purposes of clause (a) of sub-section (3) of section 7 of the Code, the financial creditor may furnish any of the following record or evidence of default, namely:-

• (a) certified copy of entries in the relevant account in the bankers’ book as defined in clause (3) of section 2 of the Bankers’ Books Evidence Act, 1891 (18 of 1891);
• (b) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, where the period of appeal against such order has expired.]

[^9][2B. Record or evidence of transaction, debt and default by operational creditor.

The operational creditor shall, alongwith application under section 9, furnish copies of relevant extracts of Form GSTR-1 and Form GSTR-3B filed under the provisions of the relevant laws relating to Goods and Services Tax and the copy of e-way bill wherever applicable:

Provided that provisions of this regulation shall not apply to those operational creditors who do not require registration and to those goods and services which are not covered under any law relating to Goods and Services Tax.

2C. Submission of information along with application.

The financial creditor or operational creditor shall, while filing application under section 7 or 9, as the case may be, also furnish details of his/ its—

• (a) Permanent Account Number; and
• (b) Email-ID.]

CHAPTER II

GENERAL

3. Eligibility for resolution professional.

• (1) An insolvency professional shall be eligible to be appointed as [^10][an interim resolution professional or a resolution professional, as the case may be,] for a corporate insolvency resolution process of a corporate debtor if he, and all partners and directors of the insolvency professional entity of which he is a partner or director, are independent of the corporate debtor.

  Explanation– A person shall be considered independent of the corporate debtor, if he:

  • (a) is eligible to be appointed as an independent director on the board of the corporate debtor under section 149 of the Companies Act, 2013 (18 of 2013), where the corporate debtor is a company;
  • (b) is not a related party of the corporate debtor; or
  • (c) is not an employee or proprietor or a partner:
    • (i) of a firm of auditors or [^11][secretarial auditors] in practice or cost auditors of the corporate debtor; or
    • (ii) of a legal or a consulting firm, that has or had any transaction with the corporate debtor amounting to [^12][five per cent] or more of the gross turnover of such firm,

  in the last three financial years.

• [^13][(1A) Where the committee decides to appoint the interim resolution professional as resolution professional or replace the interim resolution professional under section 22 or replace the resolution professional under section 27, it shall obtain the written consent of the proposed resolution professional in Form AA of the[^14][Schedule-I ].]

• (2) [^15][An interim resolution professional or a resolution professional, as the case may be,] shall make disclosures at the time of his appointment and thereafter in accordance with the Code of Conduct.

• [^16][(3) An interim resolution professional or a resolution professional, who is a director or a partner of an insolvency professional entity, shall not continue as the interim resolution professional or resolution professional, as the case may be, in a corporate insolvency resolution process, if the insolvency professional entity or any other partner or director of such insolvency professional entity represents any other stakeholder in that corporate insolvency resolution process.]

4. Access to books.

• (1) Without prejudice to section 17(2)(d), the [^17][interim resolution professional or the resolution professional, as the case may be,]may access the books of account, records and other relevant documents and information, to the extent relevant for discharging his duties under the Code, of the corporate debtor held with-
  • (a) depositories of securities;
  • (b) professional advisors of the corporate debtor;
  • (c) information utilities;
  • (d) other registries that records the ownership of assets;
  • (e) members, promoters, partners, board of directors and joint venture partners of the corporate debtor; and
  • (f) contractual counterparties of the corporate debtor.
• [^18][(2) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall provide the information within such time and in such format as sought by the interim resolution professional or the resolution professional, as the case may be.
• (3) The creditor shall provide to the interim resolution professional or resolution professional, as the case may be, the information in respect of assets and liabilities of the corporate debtor from the last valuation report, stock statement, receivables statement, inspection reports of properties, audit report, stock audit report, title search report, technical officers report, bank account statement and such other information which shall assist the interim resolution professional or the resolution professional in preparing the information memorandum, getting valuation determined and in conducting the corporate insolvency resolution process.]