On August 7, 2020, the Insolvency and Bankruptcy Board Of India (“IBBI”) amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“Regulations”) vide the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 (“Amended Regulations”).

Identifying Insolvency Professional:

Under regulation 4A(2), the interim resolution professionals (“IRP”) is required to identify 3(three) insolvency professionals to represent the creditors in a class as specified in regulation 4A(1). The Amended Regulations propose that such insolvency professionals shall have their registered address with the IBBI in the same state or union territory as the highest number of creditors as per address in the record of the corporate debtor. Therefore, the IRPs will be required to identify the insolvency professionals from the state or union territory which has the highest number of a class of creditors. However, if such state or union territory does not have adequate insolvency professionals, the insolvency professionals having addresses in the nearby states or union territories shall be considered.

Preliminary views on the agenda circulated:

As per the amendment to regulation 16A(9), the authorised representative shall circulate the agenda to creditors in a class and seek their preliminary views on any item in the agenda, to enable the authorised representative to effectively participate in the meeting of the committee of creditors (“Committee”). The window for submitting the preliminary views shall open at least after 24 (twenty four) after the authorised representative seeks such views and the window shall be open for at least 12 (twelve) hours for submission of the preliminary views. However, such preliminary views shall not be considered as voting instructions by the creditors.

Simultaneous voting on one or more resolution plans:

Regulation 39(3) of the Regulations provided earlier for identifying the best resolution plan and approving it with modification as deemed fit. However, the Amended Regulations provide for simultaneous voting on all resolution plans received. It is now required that Committee shall:

1. evaluate all the resolution plans received as per the evaluation matrix;
2. record the deliberations on feasibility and viability for each resolution plan; and
3. vote on all the resolution plans simultaneously.

It is further provided that where only 1 (one) resolution plan is put to vote, it shall be considered approved provided it received requisite votes. However, if there are 2 (two) or more resolution plans:

1. the resolution plan which receives the highest votes, but not be less than the requisite votes, shall be considered approved;
2. where the resolution plans receive equal votes, which are not less than the requisite votes, the Committee shall approve any of the resolution plans as per the tie breaker formula announced before the voting; and
3. where none of the resolution plans achieve requisite votes, the resolution plan which has the highest vote shall be put to vote again, subject to timelines under the Code;
4. The requisite vote as per the Insolvency and Bankruptcy Code, 2016 shall be not less than 66% (sixty six percent).

Please find a copy of the Amended Regulations here.

This update has been contributed by Prakash Panjabi (Senior Partner) and Shivani Agarwal (Associate).