Revision of CIRP Regulations to Streamline Corporate Insolvency Resolution Process

On 15 February 2024, the Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 (read here) to streamline the corporate insolvency resolution process (CIRP). A summary of the key amendments are as follows: 

1. Separate bank accounts for each project: Every real estate project of the corporate debtor should have a separate bank account which shall be operated by the Insolvency Resolution Professional (IRP) or the Resolution Professional (RP) (as the case may be).  
2. Mandatory Meetings of the CoC: The RP must convene a meeting of the Committee of Creditors (CoC) within 30 days of the date of the last meeting. However, the CoC may reduce the frequency of meetings if deemed necessary, provided that at least a minimum of one meeting is held per quarter.
3. Voting time: The CoC can now set the electronic voting window’s duration between a minimum of 24 hours and a maximum of seven days, with the possibility of extending it in 24-hour increments. Additionally, to simplify the voting process, if the matters to be voted upon achieve the requisite majority, the RP will provide one last opportunity to the concerned creditors by extending the voting window by a maximum period of twenty-four hours.
4. Approval of insolvency resolution cost: The RP is now required to place the operational status of the corporate debtor in every CoC meeting and seek approval from the CoC for all costs including going concern costs related to the insolvency resolution process.
5. Fair value and liquidation value: The registered valuers in a CoC Meeting must explain the methodology adopted for valuation to the members of the CoC.
6. Disclosure of fair value in Information Memorandum: The fair value of the corporate debtor may be made part of the information memorandum, unless the CoC decides otherwise. In such cases, reasons for non-disclosure must be recorded in writing.
7. Separate Resolution plan for each real estate project: The RP can now invite a separate resolution plan for each real estate project or group of projects of the corporate debtor.
8. Monitoring committee for implementation of resolution plan: The CoC may consider the requirement of monitoring committee for implementation of each resolution plan for the real estate project of the corporate debtor. Where the CoC is of the view that a monitoring committee is required to keep track of implementation of resolution plans, it can choose to constitute the same with either the existing RP or propose another IRP or any person as its member.
9. Role of existing RP during extension of CIRP: The RP is now required to continue to discharge his responsibilities under the CIRP till the application for extension of CIRP is decided by the NCLT.

These amendments, effective from 15 February 2024, aim to streamline CIRP, aligning with the proposals outlined in the IBBI’s Discussion Paper on Real Estate Proposals – CIRP & Liquidation, dated 06 November 2023.

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