To reduce delays and realise better value through the liquidation process, the Insolvency and Bankruptcy Board of India (IBBI) has set timelines for meetings and adjudication of claims by the stakeholders’ consultation committee.
The IBBI liquidation process second amendment regulations 2022 state that the Committee of Creditors, constituted during the Corporate Insolvency Resolution Process (CIRP), should function as Stakeholders Consultation Committee (SCC) in the first 60 days.
The liquidator has been mandated to conduct the meetings of SCC in a structured and time-bound manner with better participation of stakeholders.
If any claim is not filed during the liquidation process, the amount of claim collated during CIRP should be verified by the liquidator.
The revised regulations also state that wherever the CoC decides that the process of compromise or arrangement may be explored during the liquidation process, the liquidator would file an application before the adjudicating authority, within 30 days of the order of liquidation.
Before filing an application for dissolution or closure of the process, SCC is required to advise the liquidator, the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading, shall be pursued after closure of liquidation proceedings.
The scope of mandatory consultation by liquidators with SCC has also been extended. Now, SCC may even propose replacement of liquidator to the adjudicating authority and fix the fees of liquidator, if the CoC did not do so during CIRP.