IBBI amends voluntary liquidation norms; reduces timelines to expedite the liquidation process

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  • Last Updated on 7 April, 2022

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IBBI Regulations 2022; voluntary liquidation norms;

1. Introduction

The IBBI vide. Notification no. F. No. IBBI/2022-23/GN/REG.081, Dated: 05.04.2022 has notified the IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2022. Amendments have been made with the objective to reduce the timeline for completion of the liquidation process. The amended regulations have reduced the liquidation timeliness drastically now the liquidator needs to complete the liquidation process and submit the Final Reports within 270 days/90 days earlier, it was 12 months. Further, as per the amended regulations, the liquidator shall distribute the proceeds from realization within 30 days from the receipt of the amount to the stakeholders, the earlier timeline was of 6 months.

The Key highlights of the amendments are discussed hereunder:

2. Key Highlights

1. Amendment in Regulation 10 (2) (r); Corporate Debtor is substituted by Corporate person

As per Regulation 10 (2) (r) the liquidator shall maintain such other books or registers as may be necessary to account for transactions entered into by him concerning the corporate person. The word corporate person is substituted with the word Corporate Debtor.

2. Amendment in Regulation 30 (2); Reduction in the timeline for preparation of the list of stakeholders in case where no claims are received.

As per the Regulation 30 (2) the liquidator shall prepare the list of stakeholders within 45 days from the last date for receipt of claims.

The amendment notification inserts a provision in regulation 30 (2), as per the provision the liquidator shall prepare the list of stakeholders within 15 days from the last date for receipt of claims where no claims from creditors have been received till the last date for receipt of claims.

Earlier there was no different timeline was prescribed in case where no claims from creditors.

3. Amendment in Regulation 35; Reduction in the timeline for distribution of the proceeds from realization

As per Regulation 35 the liquidator shall distribute the proceeds from realization within 6 months from the receipt of the amount to the stakeholders.

The amended regulation reduces the period for distribution of proceeds from realization to the stakeholders from the current 6 months to a period of thirty days from the receipt of the amount.

4. Amendment in Regulation 5(2); Enhancement in the timeline for intimation of appointment as liquidator to the Board.

As per Regulation 5(2) an insolvency professional shall, within seven days of his appointment, intimate the Board about his appointment as liquidator within 3 days of his appointment. The amended regulation enhanced the timeline for intimation from the current 3 days to a period of 7 days.

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