the Board of Insolvency and Bankruptcy of India (“IBBI”) issued a press release on 08.04.2022 informing the public that amendments have been made to the Insolvency and Bankruptcy Board of India (Voluntary Winding Up Procedure) Regulations 2017 (“Voluntary Winding Up Regulations”). These changes were initially notified by IBBI on its website on 05.04.2022 and became effective from the same date.
Reason for amendment
The Voluntary Winding-Up Regulation encompasses the voluntary winding-up process to be followed by a solvent legal person. It was realized that the liquidation process was significantly delayed despite the fact that liquidation does not involve the claim of creditors; has fewer assets (if any) to realize; and fewer disputes (if any) to conclude. Therefore, in order to reduce these delays and ensure a faster exit of companies, amendments have been made to modify the deadlines for activities undertaken during the voluntary liquidation process.
The following changes have been incorporated:
- The Liquidator draws up the list of stakeholders within 15 days (against 45 days previously provided) from the deadline for receipt of claims, if no claim from creditors has been received by the deadline for receipt receivables.
- The liquidator will distribute the proceeds of realization within 30 days (compared to the previously stipulated 6 months) from the receipt of the amount to the stakeholders.
- The liquidator will endeavor to complete the process of winding up the body corporate within 270 days from the start date of the winding up, where the creditors have approved the resolution under Article 59(3)(c) ) or Regulation 3(1)(c), and 90 days from the date of commencement of liquidation in all other cases (versus the 12 months previously provided for in all situations).
- In order to provide a summary of the steps taken by the liquidator during the voluntary winding up process, the Amended Voluntary Winding Up Regulations specify a certificate of compliance which must be submitted with the application under section 59(7) to the contracting authority, by the liquidator. It must enable the Judgment Authority to rule quickly on requests for dissolution.
Click here to read/download the press release