CAIRR Update September 19, 2022

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CAIRR Update September 19, 2022

Summary of the notifications issued by IBBI on 16/09/2022
IBBI amends CIRP Regulations
Key highlights of the amendment are as follows:
1. Opening of a separate email account: The interim resolution professional (IRP) shall open an email account and use it for all correspondences  with stakeholders and in the event of his replacement by another resolution professional, shall handover the credentials of the email to him/her.
2. Communication of appointment to creditors: IRP shall send a communication along with a copy of public announcement made under regulation 6, to all the creditors as per the last available books of accounts of the corporate debtor through post or electronic means.
3. Information Memorandum (IM) to be filed within 95 days from the commencement of CIRP, as opposed to the existing requirement where RP has to file the IM within two weeks of his appointment, but not later than 54 days from the insolvency commencement date, whichever is earlier. Further, IM to include additional information highlighting snapshot of business performance, key contracts, key investment highlights etc. Where the corporate debtor has a book value of total assets exceeding Rs 100 Crores, the details of business evolution, industry overview and key growth drivers etc.  to also be captured.
4. Strategy for marketing of assets of the corporate debtor: The RP shall submit a strategy for marketing of the assets of the corporate debtor in consultation with the committee, where the total assets as per the last available financial statements exceed Rs. 100 Crores. The implementation of the strategy, including the cost associated with it, is subject to the approval of the committee.
5. Factors to be considered for Liquidation: In the application submitted by the RP to Adjudicating Authority, the factors considered by the committee in arriving at the decision have to be recorded, which includes but are not limited to non-operational status for preceding three years, goods produced or service offered or technology employed turning obsolete, absence of any assets, lack of any intangible assets or factors which bring value as a going concern over and above the physical assets like brand value, intellectual property, accumulated losses etc.
6. The model timeline has been revised further to amendments made vide these notifications to procedure for dealing with preferential transactions, preparation and submission of IMs, Expression of Interests etc.
IBBI amends Voluntary Liquidation Process regulations
Key highlights of the amendment are as follows:
1. Additional declaration for initiation of liquidation: The applicant shall provide that the Corporate Person has made provision for preservation of its records after its dissolution.
2. Preservation of records:
– The list of documents to be preserved by the liquidator includes liquidator’s appointment letter, public announcement, cost of voluntary liquidation process, statutory filings with Board and insolvency professional agencies etc.
– The physical copies to be preserved for a minimum period of 3 years and electronic records, for a minimum of 8 years.
– In case of replacement of liquidator during the process, the outgoing liquidator shall handover the records to the new liquidator.
– The liquidator shall preserve the records at a secure place and shall produce the records, as required under the Code and its regulations.
–  The requirement under this regulation shall be applicable to records pertaining to the period of a liquidation process during which the liquidator acted as such, irrespective of the fact that he did not take up the assignment from its commencement or continue the assignment till its conclusion.
IBBI amends Liquidation Process regulations
Key highlights of the amendment are as follows:
1. The liquidator shall file the proposal within thirty days of the order of liquidation, where recommendation to explore proposal of compromise or arrangement has been made by the committee under CIRP Regulations.
2. Email account for communication: The liquidator shall operate the process email account handed over to him by the RP, as required under CIRP Regulations and in the event of his replacement, the credentials of such email ID shall be handed over to the new liquidator.
3. Verification of claims: The liquidator shall also verify the claims collated by the IRP/RP during the CIRP but not submitted during the liquidation process, within thirty days from the last date for receipt of claims during liquidation process and may either admit or reject the claim, in whole or in part.
4. Stakeholders’ Consultation Committee:
a. The scope of stakeholders’ consultation committee is widened to include advising the liquidator on remuneration of professionals who are appointed during the liquidation process, fees of the liquidator, valuation of assets or businesses intended to be sold etc..
b. The consultation committee, after recording the reasons, may by a majority vote of not less sixty-six  per cent., propose to replace the liquidator and shall file an application, after obtaining the written consent of the proposed liquidator in the required format (Form AA, which is prescribed in this notification), before the Adjudicating Authority for replacement of the liquidator.
c. The manner of conducting of committee meetings including serving of notice, requirement of quorum and voting, under CIRP shall be applicable for
Stakholders’ Consultation committee which is constituted under Liquidation process, as well.
5. Preservation of Records: The records pertaining to the liquidation process shall be preserved as prescribed in the regulations.
6. Manner and Timelines for conducting an auction: Timelines for various events in conducting an auction has been notified. Further, the liquidator shall complete the auction process within 35 days from the issue of public notice for auction.

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