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KoreanIBBI Amendments to CIRP Regulations: Impact on Corporate Insolvency and Real Estate
The Insolvency and Bankruptcy Board of India (“IBBI”) has notified amendments (“Amendment”) to IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) (read here). The Amendment has come into force from the date of its publication i.e., from 03 February 2025. The amendments seek to further streamline the corporate insolvency resolution process with a special focus on real estate projects. In this update, we discuss some of the major amendments.
- Introduction of Regulation 4E to facilitate handing over of the possession: The resolution professional (“RP”) of the corporate debtor (“CD”) is now enabled to handover the plot, apartments or buildings to the homebuyers and facilitate registration upon the homebuyer’s request. However, this can be done only after approval of the Committee of Creditors (“CoC”) with not less than 66% votes is obtained and the homebuyer has performed his part under the agreement with the CD. This measure will ensure that the homebuyers need not wait for a long time to obtain possession of their plots, apartments or buildings.
- Introduction of Regulation 16C and 16D for appointment of facilitators: Facilitators can now be appointed for sub classes within large creditor classes exceeding 1000 members. The facilitator can be an insolvency resolution professional other than the interim RP, RP and authorized representative. The Amendment stipulates the following conditions for the appointment of a facilitator:
- The said appointment will be considered only if after the first meeting of the CoC, a sub-class of minimum of 100 creditors out of the total number of creditors in a class request for appointment of a facilitator and submit the request with a proposed name.
- The total number of facilitators is restricted to 5.
- The fee payable to the facilitator will be part of the CIRP costs and will be 20% of the fees payable to the authorised representative.
The role and responsibilities of the facilitator will include attending CoC meetings, facilitating communication between the authorized representative and the creditors of the sub class of creditors represented by him and providing information to the creditors in the sub class about the insolvency resolution process.
- Introduction of Regulation 18(4) to allow competent authorities to attend CoC meetings: Relevant land Authorities can now be invited to attend CoC meetings to provide inputs on regulatory and land development related matters. These inputs would prove valuable in will strengthening the viability of proposed resolution plans. Further, these Authorities would not carry any voting rights, and their role will be merely directory in nature.
- Introduction of Regulation 30C for report on status of development rights and permission of real estate projects: In case of CIRP of a CD having any real estate project, the RP has to do the following:
- The RP must prepare a detailed report on the status of development rights and pending approvals required for the development of the real estate project.
- The said report must be submitted to the CoC for its comments.
- Further, the report must, along with the comments of the CoC, be submitted to the Adjudicating Authority within 60 days from the date of commencement of insolvency.
- Amendment to Regulation 36A (4) to include details of MSME status: The RP must now, in the Expression of Interest, disclose the status of the CD as a micro, small, or medium enterprise (“MSME”). This will aid the resolution of the CD as by virtue of its status as an MSME, prospective resolution applicants can avail benefits and relaxations available for MSMEs under the Insolvency and Bankruptcy Code, 2016.
- Amendment to Regulation 36B (4A) to introduce relaxations: In case of CIRP of a CD having any real estate project, the CoC, representing not less than ten per cent or 100 creditors out of the total number of creditors in a class, whichever is lower, can now relax conditions such as eligibility criteria, performance security and deposit for submission of resolution plans, for associations or group of homebuyers to increase their participation in the CIRP as resolution applicants.
- Amendment to Regulation 38 to introduce formation of monitoring committee: CoC can now form a monitoring committee to monitor and supervise the implementation of a resolution plan. The said committee may consist of the RP, or any other insolvency professional, or any other person, including representatives of the creditors and the successful resolution applicant. This monitoring committee is mandated to submit quarterly progress reports regarding the implementation of the plan to the Adjudicating Authority.
The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law LLP disclaims all liability to any person for any loss or damage caused by errors or omissions, whether arising from negligence, accident, or any other cause.
