The Insolvency and Bankruptcy Board of India (“IBBI”) has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) vide the IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2018 (“2nd Amendment Regulations”) (available here) effective from 1 April 2018, to amend the CIRP Regulations to inter alia provide for:
1. Scope of “insolvency resolution process cost” widened to include fees paid to insolvency professional entities (IPEs).
As per the CIRP Regulations, the amount of expenses ratified by the committee of creditors (“COC”) or fixed by the COC shall be treated as insolvency resolution process costs. And the term “expenses” meant the fee to be paid to the interim resolution professional and other expenses, including the cost of engaging professional advisors, to be incurred by the interim resolution professional.
As per the 2nd Amendment Regulations, the term “expenses” has been redefined, to provide an inclusive definition, which will include the fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional.
2. Item wise disclosure of cost by insolvency professionals.
As per the 2nd Amendment Regulations, the interim resolution professional or the resolution professional, as the case may be, have been mandated to disclose item wise insolvency resolution process costs in such manner as may be required by the IBBI.
3. Timely identification of resolution applicant.
As per the 2nd Amendment Regulations, the resolution professional are now required to identify the prospective resolution applicants on or before the 105th day from the insolvency commencement date.
4. Requirement of affidavit by claimants replaced with declaration.
For submission of proof of claim by creditors and other claimants, they were required to file an affidavit with the interim resolution professional. The requirement of filing affidavit has been done away with by the 2nd Amendment Regulations, and now they are required to only give a declaration with respect to the facts stated in the claim application.
5. Financial creditors to declare their related party status in relation to the corporate debtor.
As per the 2nd Amendment Regulations, the financial creditors are required to declare in their claim application whether they are / are not related party to the corporate debtor as per the provisions of the Insolvency and Bankruptcy Code, 2016.