[Analysis] Streamlining Insolvency Compliance | Proposed Changes to CIRP Forms

Insolvency Compliance refers to the adherence to legal and regulatory requirements governing the process of resolving insolvency cases. This includes filing necessary forms, meeting deadlines, and providing accurate information to regulatory bodies.
Changes in CIRP Forms:
– Form IP-1 (Pre-assignment Form): Dropped – Details now submitted via the assignment portal.
– Form CIRP-1: Merged into CP-1 – To be filed after the constitution of the Committee of Creditors (CoC).
– Form CIRP-2, CIRP-3, CIRP-4: Merged into CP-2 – To be filed after the issue of the Request for Resolution Plan (RFRP).
– Form CIRP-5: Revamped into CP-3A and CP-3B – Separate forms for application details and AA's decisions.
– Form CIRP-6: Dropped – Information captured in other forms.
– Form CIRP-7: Revamped into CP-5 – Monthly updates with minimal fields.
– Form CIRP-8: Revamped into CP-4 – Focuses on avoidance transactions reported to the AA.

Table of Contents

1. Introduction
2. Proposed Changes to CIRP Forms
3. Simplified Monthly Reporting for Insolvency Professionals to Ease Compliance
4. Impact of the Proposals
5. Conclusion

1. Introduction

Professionals are often burdened with extensive paperwork and complex compliance requirements in the fast-paced world of insolvency resolution. Recognising this challenge, the Insolvency and Bankruptcy Board of India (IBBI) has proposed simplifying and streamlining these processes.

During the 27th meeting of the Financial Stability and Development Council (FSDC) on May 8, 2023, a clear directive was issued to reduce the compliance burden on insolvency professionals (IPs) and create an efficient regulatory environment. In response, IBBI released a discussion paper on June 10, 2024, suggesting significant changes to the Corporate Insolvency Resolution Process (CIRP) forms.

The objective is to make compliance easier, faster, and more effective, allowing professionals to focus on resolving insolvency cases efficiently. Let’s explore these proposed changes in detail and understand their potential impact on the industry.

2. Proposed Changes to CIRP Forms

Several significant changes have been proposed to streamline compliance and reduce the burden on insolvency professionals (IPs) for the forms and reporting requirements associated with the Corporate Insolvency Resolution Process (CIRP). These changes are presented in tabular format for better understanding.

3. Simplified Monthly Reporting for Insolvency Professionals to Ease Compliance

Currently, insolvency professionals (IPs) must adhere to a complex timeline for filing various CIRP forms, with due dates triggered by specific events such as the commencement of insolvency, public announcements, and the Resolution Professional (RP) appointment. This creates a scattered filing schedule that can be particularly challenging for IPs managing multiple assignments.

The new proposal suggests transitioning to a monthly compliance reporting framework to address this. Under this system, IPs would report the status and progress of the CIRP as of the last day of each month. These reports would be due by the 10th day of the following month. This change aims to simplify the compliance process, reduce administrative burdens, and ensure a more consistent and manageable filing schedule for IPs.

4. Impact of the Proposals

By centralising compliance procedures and migrating specific obligations to the IBBI website, these proposals aim to simplify the compliance process, enhance accessibility, and improve regulatory oversight. The key benefits include:

• Reduced Compliance Burden – Fewer forms and streamlined reporting requirements.
• Efficient Monitoring – Better data availability for effective decision-making by the IBBI.
• Time-saving – A more efficient process allowing IPs to focus on their core responsibilities.

5. Conclusion

The IBBI’s proposals mark a significant step towards a more streamlined and efficient compliance process for insolvency professionals. By simplifying forms, consolidating reporting, and introducing a monthly compliance framework, these changes aim to ease the compliance burden on IPs while ensuring comprehensive and timely information for monitoring purposes. This transformation could be beneficial, paving the way for a more streamlined insolvency process in India.