Introduction
Eligibility
Eligibility of Resolution Professional
AGENDA Time Period and Procedure
Procedure
Approval of Resolution Plan
International Perspective
Notification by Ministry of Corporate Affairs
INTRODUCTION
Dated 14th June, 2017
Provisions under Insolvency and Bankruptcy Code, 2016
Focus on speedy insolvency resolution
Chapter IV of the Code
Sections 55 to 58
Application for Fast Track process
Proof of default required
Records from information utility specified by IBBI
Objective of Fast Track
Complete procedure within half of the default time period specified
Small Company Definition
Defined under clause 85 of section 2 of the Companies Act, 2013
Startup Definition
Defined by Ministry of Commerce and Industry
Unlisted Company Criteria
Total assets not exceeding rupees one crore in the preceding
financial year
ELIGIBILITY
Corporate Debtor Criteria
Assets and income below a level notified by the Central
Government
Class of creditors or amount of debt as notified by the Central
Government
Other Categories
As may be notified by the central government
Role of Insolvency Professionals (IP)
Act as intermediaries in the insolvency resolution process
Considered regulated but private professionals
DEFINITION AND Must adhere to minimum standards of professional and ethical conduct
ROLE OF Definition of Insolvency Professional
INSOLVENCY Defined under Section 3(19) of the Code
Enrolled under section 206 with an insolvency professional agency
PROFESSIONALS Registered with the Board under section 207
Insolvency Professional Entity
Recognised under the Insolvency and Bankruptcy Board of India
(Insolvency Professionals) Regulations, 2016
Independence from Corporate Debtor
IP or all partners and directors of the insolvency professional entity
must be independent of the corporate debtor
Absence of Restraint Order
IP or the insolvency professional entity must not be under a restraint
CRITERIA FOR order of the Board
APPOINTMENT Mandatory Disclosures
IP must make disclosures at the time of appointment and thereafter as
per the Code of Conduct
No Conflict of Interest
IP or any partner/director of the insolvency professional entity must
not represent other stakeholders in the same fast track process
Fast Track CIRP Duration
Completed within 90 days from the commencement of insolvency
proceedings
TIME FRAME FOR Compared to 180 days in the standard CIRP procedure
FAST TRACK CIRP Extension Possibility
Extension of 45 days can be granted
Requires a vote of 75% of the Committee of Creditors (CoC)
Approval by the National Company Law Tribunal (NCLT)
Appointment of Temporary Resolution Professional
Handles initial stages of the resolution process
Presentation and Review of Claims
Claims are assessed for validity
ACCELERATED Formation of Creditor Committee
PROCESS STEPS Committee represents the interests of creditors
Approval of Resolution Plan
Plan must be viable to avoid liquidation
Initiation of Liquidation
Occurs if resolution plan is not viable
REGULATIONS AND
AMENDMENTS
IBBI (Fast Track Insolvency Resolution for
Corporate Persons) Regulations, 2017
Specified procedure for Fast Track CIRP
Amended in 2018
Broad Basic Principles
Similar to normal procedure
Based on IBBI (Insolvency Resolution Process
for Corporate Persons) Regulations, 2016
Procedural Simplifications
Made to streamline the process
Submission of Claims
Creditors must submit proof of claims
Submission should be done before the last date mentioned in the public
announcement
SUBMISSION AND Claims can be submitted to the interim Resolution Professional or
Resolution Professional
VERIFICATION OF Verification of Claims
CLAIMS Resolution Professional verifies every claim within seven days
Maintains a list of creditors
List includes names of creditors, amount claimed, number of claims
admitted, and security interest
List is regularly updated
CLAIMS BY Submission of Proof of Claim
WORKMEN/EMPLOYEES Workmen or employees must submit proof of claim to the interim Resolution
Professional
Submission can be done in person, by post, or by electronic means
Authorized Representative for Multiple Claims
In cases of numerous workmen or employees, an Authorized Representative
can submit one proof of claim on their behalf
CLAIMS BY OPERATIONAL CREDITORS
Claims by Operational Creditors
Submit proof of claim to interim Resolution Professional
Submission methods: in person, by post, or electronic means
Claims by Financial Creditors
Submit proof of claim to interim Resolution Professional
Submission method: electronic form only
Role of Resolution Professional
Acts as chairman of the meeting
Circulates minutes of the meeting within 48 hours
Quorum Requirements
Members representing at least 33% of voting rights
CONDUCT, QUORUM, Can attend in person, via video conferencing, or other audio-visual
AND VOTING IN COC means
Adjournment of Meetings
MEETINGS
Meeting stands adjourned if quorum is not met
Adjourned meeting will be quorate with attending members
Circulation of Decisions
Within 24 hours of voting conclusion
Within 48 hours if no electronic vote is required
Resolution Professional's Responsibility
Must appoint a Registered Valuer within seven days of appointment
APPOINTMENT Purpose of Registered Valuer
OF REGISTERED Determine the fair value of the corporate debtor
VALUER Determine the liquidation value of the corporate debtor
Regulatory Compliance
In accordance with Regulation 34 of the IBBI Regulations, 2017
Issuance of Invitation
Resolution Professional issues invitation to prospective resolution
applicants
Includes evaluation matrix
INVITATION OF Issued at least fifteen days before the last date of submission
RESOLUTION Modification of Invitation
PLAN Resolution Professional may modify invitation and evaluation matrix
Requires approval of the CoC
Publication of Invitation
Brief particulars published on company's website
Also published on IBBI designated website
Transfer of Assets
Transfer all or part of assets to one or more persons
Sale of Assets
Sale of all or part of assets, with or without security interest
Acquisition and Merger
Substantial acquisition of shares or merger with one or more
RESOLUTION PLAN persons
DETAILS Security Interest
Debt Terms
Constitutional Amendments
Issuance of Securities
Change in Portfolio
Technology and Approvals
Resolution Applicant's Submission
Submit resolution plan as per IBC and IBBI Regulations
SUBMISSION AND Submission within the prescribed time in the invitation under Section
25(2)(h)
COMPLIANCE Resolution Professional's Role
Submit all compliant resolution plans to the committee
Include details of any observed, found, or determined transactions
TRANSACTIONS TO BE OBSERVED
Preferential Transactions
Governed by Section 43
Undervalued Transactions
Governed by Section 45
Extortionate Credit Transactions
Governed by Section 50
Fraudulent Transactions
Governed by Section 66
COMMITTEE APPROVAL AND SUBMISSION TO NCLT
Committee Approval of Resolution Plan
Committee may approve any resolution plan with modifications
Submission to NCLT
Resolution Professional to submit approved plan to NCLT
Submission must be at least fifteen days before expiry of maximum period under Section 56
Order of NCLT Approval or Rejection
Resolution Professional sends a copy to participants and resolution
applicant
Effect of Resolution Plan Provisions
Provisions take effect without consent of members or partners
ORDER AND Includes constitutional documents, shareholders’ agreements, joint
venture agreements
IMPLEMENTATION
Protection for Resolution Professional
No proceedings for actions of corporate debtor before Fast Track
commencement
Assistance in Implementing Resolution Plan
Application to adjudicating authority for local district administration
assistance
Comparison with International Frameworks
United States: Small Business Reorganization Act simplifies bankruptcy
for small businesses
United Kingdom: Streamlined process minimizes court intervention and
speeds up resolution
Challenges in Implementation
INTERNATIONAL India's process designed to be effective but faces challenges in achieving
PERSPECTIVE desired resolution speed
Higher Recovery Rates in US and UK
Established frameworks in these countries result in higher recovery
rates
Importance of Continuous Improvement
Adapting India's framework to ensure efficient, effective, and fair
solutions for small and micro enterprises
