Wheels set in motion for new insolvency and bankruptcy regime

Appointments
Draft rules and regulations

Following the establishment of the Insolvency and Bankruptcy Board of India, the government has taken two concrete steps to expedite the implementation of the Insolvency and Bankruptcy Code 2016 – in particular, the government has:

• appointed members to the Insolvency and Bankruptcy Board; and
• released draft rules and regulations.

Appointments

After notifying the provisions of the code (by way of notifications dated August 5 2016(1) and August 19 2016,(2) respectively) that address the constitution of the Bankruptcy Board, including the appointment of a chair and full-time members, its powers and other related provisions, the Ministry of Corporate Affairs notified(3) the Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules 2016, which provide the terms and conditions of service for the Bankruptcy Board members.

After inviting applications for the chair and board members, the Appointments Committee of the Cabinet appointed MS Sahoo as the chair of the Bankruptcy Board on September 22 2016.(4) Thereafter, by an order dated October 1 2016,(5) four ex officio members were appointed:

• Ajay Tyagi, additional secretary, Finance Ministry;
• Amardeep Singh Bhatia, joint secretary, Ministry of Corporate Affairs;
• GS Yadav, joint secretary, Department of Legal Affairs; and
• A Unnikrishnan, legal adviser, Reserve Bank of India.

The Bankruptcy Board's first meeting was held on October 7 2016.(6) The government is taking steps to expand the board by appointing additional members.

Draft rules and regulations

In order to implement the code, the Ministry of Corporate Affairs established a working group comprised of practitioners and experts. The working group made recommendations regarding rules and regulations for the insolvency resolution and liquidation of insolvent corporate persons. Based on the working group's recommendations, the Ministry of Corporate Affairs drafted the rules and regulations. Accordingly, the Ministry of Corporate Affairs issued two public notices releasing the drafts and inviting comments by interested stakeholders, pursuant to which the rules and regulations will be finalised:

• The public notice of October 1 2016(7) released the following regulations for public comment:
  • the draft Insolvency and Bankruptcy (Model Bylaws of Insolvency Professional Agencies) Regulations 2016;(8)
  • the draft Insolvency and Bankruptcy (Registration of Insolvency Professional Agencies) Regulations 2016;(9) and
  • the draft Insolvency and Bankruptcy (Registration of Insolvency Professionals) Regulations 2016.(10)

• The public notice of October 10 2016(11) released the following rules and regulations for public comment:
  • the draft Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016;(12)
  • the draft Insolvency and Bankruptcy (Insolvency Process for Corporate Persons) Regulations 2016;(13) and
  • the draft Insolvency and Bankruptcy (Liquidation of Insolvent Corporate Persons) Regulations 2016.(14)

With the Bankruptcy Board now established, these draft rules and regulations are a positive step towards achieving a fully functional insolvency and bankruptcy regime encapsulated under the code.

For further information on this topic please contact Jyoti Singh at Phoenix Legal by telephone (+91 22 4340 8500) or email ([email protected]). The Phoenix Legal website can be accessed at www.phoenixlegal.in.

Endnotes