Move, a step in theright direction,say experts
The Insolvency and Bankruptcy Board of India (IBBI) has made several changes to its voluntary liquidation regulations so as to fast track the process, thereby providing quicker exits for corporate persons, release idle resources faster and put them into productive uses.
The changes include crunching the timelines in preparation of list of stakeholders; distribution of proceeds from realisation and submission of final report to the adjudicating authority.
The latest amendment provides that in cases where no claims are received from any creditor(s), final report may be provided in 90 days from the date of commencement of the process. Where claims are received from creditor(s), the period for submission may be provided as 270 days.
Besides, a compliance certificate (format specified under a new Form H) similar to the one under CIRP and liquidation regulations, has also been introduced. It would contain a summary of the entire voluntary liquidation.
Now, a liquidator is needed to distribute the proceeds from realisation within 30 days to the stakeholders as opposed to the earlier norm of six months from the receipt of the amount. In cases where no claim is received, the liquidator is now required to prepare the list of stakeholders within 15 days from the last date for receipt of claims.
The unamended regulation only provided for preparation of the list of stakeholders within 45 days, said Meghna Mishra, Senior Partner — Karanjawala & Co. The latest amendments will help streamline and expedite the process, she added.
Sushmita Gandhi, Partner, IndusLaw, said, “While the compressed process timelines would streamline and speed up the overall conclusion of voluntary liquidation process and ensure conservation of asset value, it is the introduction of compliance certificate that will hopefully act as a catalyst in ensuring consistency across benches and save precious judicial time.”
Kumar Saurabh Singh, Partner, Khaitan & Co, said, “These amendments can help the exit process for entities which do not have creditor liabilities.” Overall, a step in the right direction for ease of doing business and ease of exiting business, he added.
While Pritika Kumar, Founder — Cornellia Chambers, said the changes have streamlined and fast tracked the process, Sagar Manju, Partner, Saraf & Partner, said it is in line with the ‘time value’ principle under the IBC.