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NEW DELHI: The Insolvency & Bankruptcy Board of India (IBBI) has reworked its regulations to provide more time for submission of claims in a move that will benefit creditors, especially homebuyers and government agencies, hit by insolvency action in the real estate sector.
The new rules provide for extension of timeline for claim submission to either 90 days from the insolvency commencement date (ICD) or the date of issue of the latest request for resolution plan (RFRP), whichever is later. Currently, claims have to be filed within 90 days of ICD.
Under the new norms, claims filed after the stipulated 90-day period will have to mention the reason for delay and the resolution professional should provide reasons for non-collation of the claim. IBBI has said that for claims that are received after the stipulated time but seven days before the meeting of the committee of creditors, the resolution professional will decide about acceptability of collation of late claim. The decision to recommend their inclusion in the list of claims and their treatment in the resolution plan has been left to the committee of creditors – the apex decision making body during the resolution process.
For several creditors, especially homebuyers, non-submission of claims within the 90-day period has proved to be a problem and IBBI has decided to provide some more breathing space, at least for new cases. Besides, several other creditors could not comply with the earlier stipulation.
“The increase in the timeline for filing claims by creditors is a welcome relief for creditors, particularly tax authorities, with legitimate claims who fail to inadvertently lodge their claims with the resolution professional. However, this also creates an uncertainty in the minds of potential resolution applicants who may not have the complete details of liabilities of the corporate debtor at the time of invitation of expressions of interest,” said L Badri Narayanan, executive partner at law firm Lakshmikumaran and Sridharan.
While IBBI was planning to bring in changes to some of its regulations after the amendment of the Insolvency & Bankruptcy Code, a delay in introducing the Bill may have prompted it to tweak some of its regulations to make the process smoother.
The agency has now laid down the process to provide information by the company and its executives to the resolution professional as the rules lacked clarity.
Besides, there are changes meant to enhance the role of authorised representatives, who assist in the resolution process, to increase their interaction with the National Company Law Tribunal and the appellate tribunal as well as help creditors in crafting a marketing strategy besides suggesting modifications to the resolution plan. Provisions have also been incorporated to provide for their replacement.
The new rules provide for extension of timeline for claim submission to either 90 days from the insolvency commencement date (ICD) or the date of issue of the latest request for resolution plan (RFRP), whichever is later. Currently, claims have to be filed within 90 days of ICD.
Under the new norms, claims filed after the stipulated 90-day period will have to mention the reason for delay and the resolution professional should provide reasons for non-collation of the claim. IBBI has said that for claims that are received after the stipulated time but seven days before the meeting of the committee of creditors, the resolution professional will decide about acceptability of collation of late claim. The decision to recommend their inclusion in the list of claims and their treatment in the resolution plan has been left to the committee of creditors – the apex decision making body during the resolution process.
For several creditors, especially homebuyers, non-submission of claims within the 90-day period has proved to be a problem and IBBI has decided to provide some more breathing space, at least for new cases. Besides, several other creditors could not comply with the earlier stipulation.
“The increase in the timeline for filing claims by creditors is a welcome relief for creditors, particularly tax authorities, with legitimate claims who fail to inadvertently lodge their claims with the resolution professional. However, this also creates an uncertainty in the minds of potential resolution applicants who may not have the complete details of liabilities of the corporate debtor at the time of invitation of expressions of interest,” said L Badri Narayanan, executive partner at law firm Lakshmikumaran and Sridharan.
While IBBI was planning to bring in changes to some of its regulations after the amendment of the Insolvency & Bankruptcy Code, a delay in introducing the Bill may have prompted it to tweak some of its regulations to make the process smoother.
The agency has now laid down the process to provide information by the company and its executives to the resolution professional as the rules lacked clarity.
Besides, there are changes meant to enhance the role of authorised representatives, who assist in the resolution process, to increase their interaction with the National Company Law Tribunal and the appellate tribunal as well as help creditors in crafting a marketing strategy besides suggesting modifications to the resolution plan. Provisions have also been incorporated to provide for their replacement.
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