On September 18, 2023, the Insolvency and Bankruptcy Board of India (“IBBI”) notified a second amendment to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The key amendments are as follows:

• After regulation 2C, the following regulation shall be inserted namely:

“2D. Details of debt, default and limitation in respect of applications under section 7 or section 9.

While filing an application under section 7 or 9, the financial creditor or the operational creditor, as the case may be, shall also submit along with evidence, chronology of the debt and default including the date when the debt became due, date of default, dates of part payments, if any, date of last acknowledgment of debt and the limitation applicable.”

• In the principal regulations, after regulation 3, the following shall be inserted namely:

“3A. Assistance and cooperation by the personnel of the corporate debtor.

(1) The interim resolution professional or resolution professional, as the case may be, shall take custody and control as specified under this regulation from the personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor as the case may be, of the following: –

1. the records of information relating to the assets, finances and operations of the corporate debtor referred in clause (a) of section 18 and such other information required under regulation 36;
2. the assets recorded in the balance sheet of the corporate debtor or in any other records referred in clause (f) of section 18.

(2) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall provide to the interim resolution professional or resolution professional, as the case may be, a list of assets and records while handing over their custody and control, and the interim resolution professional or resolution professional may, after taking such custody and control, if deemed necessary, identify person(s) in whose possession these assets and records will be held.

(3) Where any asset or record has not been handed over or the list has not been provided under sub-regulation (2), the interim resolution professional or resolution professional, as the case may be, shall himself prepare a list of assets and records while taking custody and control of assets and records, and the interim resolution professional or resolution professional may, after taking such custody and control, if deemed necessary, identify person(s) in whose possession these assets and records will be held.

(4) Each list of assets and records under sub-regulation (2) and (3) shall be signed by the parties present and by at least two individuals who have witnessed the act of taking control and custody of such assets and records.

(5) The interim resolution professional or resolution professional, as the case may be, shall requisition from the personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor as the case maybe, the information relating to the assets, finances and operations of the corporate debtor referred in clause (a) of section 18 and such information required under regulation 36 which were required to be maintained by the corporate debtor but have not yet been handed over.

(6) The interim resolution professional or resolution professional, as the case may be, shall requisition from the personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor as the case maybe, the assets which are recorded in the balance sheet or in any other records referred in clause (f) of section 18 and whose custody has not been handed over.

(7) An application made under sub-section (2) of section 19 in respect of failure to provide any asset or record as requisitioned under the Code and this regulation, shall show presence of such asset or record in the notice of requisition and absence of such asset or record in the list of assets and records taken in control and custody under subregulation (2) and (3).”

• In regulation 12 of the principal regulations, (i) For sub-regulation (1), the following shall be substituted, namely: –

“(1) A creditor shall submit claim with proof on or before the last date mentioned in the public announcement.

Provided that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit his claim with proof to the interim resolution professional or the resolution professional, as the case may be, up to the date of issue of request for resolution plans under regulation 36B or ninety days from the insolvency commencement date, whichever is later:

Provided further that the creditor shall provide reasons for delay in submitting the claim beyond the period of ninety days from the insolvency commencement date.”

(ii) Sub-regulation (2) shall be omitted.

• In regulation 13 of the principal regulations, after sub-regulation (1), the following shall be inserted namely: –

“(1A) Where the interim resolution professional or the resolution professional, as the case may be, does not collate the claim after verification, he shall provide reasons for the same.

(1B) In the event that claims are received after the period specified under sub-regulation (1) of regulation 12 and up to seven days before the date of meeting of creditors for voting on the resolution plan or the initiation of liquidation, as the case may be, the interim resolution professional or resolution professional, as the case may be, shall verify all such claims and categorise them as acceptable or non-acceptable for collation.

(1C) The interim resolution professional or resolution professional, as the case may be, shall: –

1. intimate the creditor within seven days of categorisation thereof under sub-regulation (1B) and provide reasons where such claim has been categorised as non-acceptable for collation; and
2. put up the claims categorised as acceptable under sub-regulation (1B) and collated by him to:-
   1. the committee in its next meeting for its recommendation for inclusion in the list of creditors and its treatment in the resolution plan, if any; and
      1. submit such claims before the Adjudicating Authority for condonation of delay and adjudication wherever applicable.”

• In the principal regulations, in regulation 16A,

After sub-regulation (3), the following shall be inserted, namely: –

“(3A) The financial creditors in the class, representing not less than ten per cent. voting share may seek replacement of the authorised representative with an insolvency professional of their choice by making a request to the interim resolution professional or resolution professional who shall circulate such request to the creditors in that class and announce a voting window open for at least twenty-four hours.

(3B) Subject to clauses (a) and (b) of sub-regulation (2) of regulation 4A, the interim resolution professional or resolution professional, as the case may be, shall offer choice of at least three insolvency professionals to the financial creditors in the class including such insolvency professional(s) proposed under sub-regulation (3A) along with the existing authorised representative.

(3C) The resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representative who receives the highest percentage of voting share of financial creditors in that class.”

For sub-regulation (8), the following shall be substituted; namely: –

“(8) (a) The authorised representative of creditors in a class shall be entitled to receive fee for every meeting of the committee attended by him in the following manner, namely: –

• The authorised representative shall be entitled to receive fee for every meeting of the class of creditors convened by him in the following manner, namely: –

• The payment of fee to authorised representative shall be part of insolvency resolution process cost in respect of two meeting with the creditors he represents corresponding to a meeting of the committee of creditors.
  • The fee for any additional meeting beyond two meetings corresponding to a meeting of the committee of creditors shall be part of insolvency resolution process cost subject to approval of committee of creditors.”

After sub-regulation (9), the following shall be inserted, namely: –

“(10) The authorised representative shall: –

• assist the creditors in a class he represents in understanding the discussions and considerations of the committee meetings and facilitate informed decision-making;
• review the contents of minutes prepared by the resolution professional and provide his comments to the resolution professional, if any;
• help the creditors in a class he represents during the consultations made by the resolution professional to prepare a strategy for marketing of the assets of the corporate debtor in terms of sub-regulation (1) of regulation 36C;
• work in collaboration with the creditors in a class he represents to enhance the marketability of the assets of the corporate debtor in terms of sub-regulation (3) of regulation 36C;
• assist the creditors in a class he represents in evaluating the resolution plans submitted by resolution applicants;
• ensure that the creditors in a class he represents have access to any information or documents required to form an opinion on issues discussed in the committee meetings;
• update regularly the creditors in a class he represents on the progress of the corporate insolvency resolution process;
• make suggestions for modifications of the resolution plan as may be required by the creditors in class he represents;
• record proceedings and prepare the minutes of the meeting with the creditors in a class he represents; and
• act as a representative for the creditors in a class he represents in representations before the Adjudicating Authority, National Company Law Appellate Tribunal, and other regulatory authorities.

“(11) The provisions regarding minutes of meetings in this regulation shall apply mutandis for clause (i) of sub-regulation (10).

(12) The creditors in a class may propose any additional responsibility upon the authorised representative in relation to the representation of their interest in the committee.”

• In the principal regulations, for sub-regulation (1), in regulation 28, the following shall be substituted, namely: –

“(1) In the event a creditor assigns or transfers the debt due to such creditor to any other person during the insolvency resolution process period, both parties shall, within seven days of such assignment or transfer, provide the interim resolution professional or the resolution professional, as the case may be, the terms of such assignment or transfer and the identity of the assignee or transferee.”

• In the principal regulations, after regulation 30A, the following regulation shall be inserted, namely: –

“30B. Audit of corporate debtor

(1) Any member(s) of the committee may propose an audit of the corporate debtor along with the objectives, scope, estimate of the costs, timeframe and name(s) of the proposed auditor(s).

(2) A proposal made under sub-regulation (1) shall be considered as per sub-regulation (3) of regulation 18 and an audit shall be conducted if such proposal is approved by the committee.

(3) The audit shall be conducted by an insolvency professional having qualifications required for such audit.

(4) The auditor shall prepare a report detailing his findings and the same shall be presented before the committee along with the comments of the interim resolution professional or the resolution professional, as the case may be.

(5) The expenses of such audit shall be treated as insolvency resolution process costs.”

• In the principal regulations, in regulation 36B, for sub-regulation (1), following shall be substituted, namely: –

“(1) The resolution professional shall, within five days of the date of issue of the final list under sub-regulation (12) of regulation 36A, issue the information memorandum, evaluation matrix and a request for resolution plans to every resolution applicant in the final list:

Provided that where such documents are available, the same may also be provided to every prospective resolution applicant in the provisional list.” Besides the key amendments listed above, In the principal regulations, in regulation 40A, in the table, for the row relating to Regulation 36B was substituted. In the principal regulations, in regulation 40B, in sub-regulation (1A), in the table, for rows SI 3 and 4 was substituted and in principal regulations, Schedule-I, for Form G was substituted and minor changes were made in Form H.