India – Government Amends The Rules Relating To Liquidation Of Corporate Debtor.

IBBI has introduced amendments to the IBBI (Liquidation Process) Regulations, 2016 largely increasing the scope of the role played by the Stakeholders Consultation Committee (SCC). Now the SCC can also advice the Liquidator on the appointment of professionals and their remuneration, and also on the sale process to be adopted by the Liquidator, i.e., manner of sale, pre-bid qualifications, reserve price, earnest money, marketing strategy, etc. The Liquidator will also have to place before the SCC in the first SCC meeting the decisions taken prior to the SCC’s constitution. If the Liquidator does not follow any advice given by SCC or rejects the highest bid submitted, then the reasons for the same must be mentioned in the next progress report.
 

Also, earlier the representative of each class of stakeholder was selected based on highest claim. However now, the representative in the SCC shall be selected by a majority vote of present and voting stakeholders of that class. The amendment has introduced certain conditions with respect to the participation fee and earnest money deposit requirements during the sale of assets by the Liquidator. Now the Liquidator cannot require a non-refundable deposit or fee for participation in an auction. Further the amendment also states that the earnest money deposit must not exceed 10% (ten percent) of the reserve price.
 

Please click here to read our detailed note on the amendment
 

 

For further information, please contact:  

Souvik Ganguly, Partner, Acuity Law