The Insolvency and Bankruptcy Board of India (IBBI) notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2018 (Amendment Regulations) on 4 July 2018 to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) for the third time this year. Primarily, the Amendment Regulations seek to align the CIRP Regulations with the revised Insolvency and Bankruptcy Code, 2016 (IBC) post issuance of the Insolvency and Bankruptcy Code (Amendment) Ordinance 2018 (Ordinance). However, the Amendment Regulations also contain other changes governing the bid process and have rendered the CIRP Regulations significantly prescriptive.
The Amendment Regulations are applicable to corporate insolvency resolution processes (CIRPs) commencing on or after the date of their notification (i.e. 4 July 2018). Therefore, ongoing CIRPs that have commenced prior to 4 July 2018 will continue to be governed by the provisions of the unamended CIRP Regulations.
A brief snapshot of the key amendments is given below:
The Amendment Regulations are prescriptive in nature and impose strict timelines. While, in many instances this will improve deal certainty, it may, in some instances, curtail the ability of RPs to maximise recoveries in the hands of stakeholders. The Amendment Regulations is yet another substantive amendment to the CIRP process, and it continues to indicate the Government’s commitment to overhaul India’s credit regime and clean-up bank balance sheets. These amendments promise to have far reaching implications on CIRPs initiated post 4 July 2018.