Move will help in curbing opaque bids for resolution, say experts
A notification by IBBI added a new provision in the regulation dealing with mandatory contents of the resolution plan. | Photo Credit: lakshmiprasad S
In an effort to curb opaque bids for resolution, Insolvency and Bankruptcy Board of India (IBBI) has made it mandatory to disclose beneficial ownership in the resolution plan.
A notification by IBBI added a new provision in the regulation dealing with mandatory contents of the resolution plan. “Every resolution plan shall include a statement of beneficial-ownership, covering details of all natural persons who ultimately owns or controls the resolution applicant, together with the shareholding structure and jurisdiction of each intermediate entity,” the notification said. Also, an affidavit needs to be given about whether the resolution applicant is eligible/not eligible for the benefit under section (32A) of IBC dealing with ‘Liability for prior offences’
The amendments are critical considering the Supreme Court’s last year ruling for liquidation of Jet Airways after Jalan–Kalrock Consortium (JKC) failed to implement the resolution plan. The ruling suggested reforms including ensuring the quality and seriousness of resolution applicants.
The amendments have been made effecting from December 23.
“The Seventh Amendment to the CIRP Regulations raises the transparency bar in Indian insolvency. With mandatory beneficial ownership disclosures and Section 32A affidavits, the IBBI is signaling zero tolerance for opaque bids — giving creditors clarity and reducing post-resolution disputes” said Parvesh Kheterpal, General Counsel at Ampyr Energy.
Ruby Singh Ahuja, Senior Partner at Karanjawala & co, feels increased transparency by helping in identifying hidden or complex ownership structures, preventing the entry of promoters or parties with a questionable background into the resolution process.
Clean slate protection
Experts also said that requirement of an affidavit is significant from a forensic perspective. “It ensures that the ‘clean slate’ protection against prior liabilities is granted only after rigorous scrutiny, preventing ineligible promoters from re-entering through the backdoor,” Srinivasa Rao, Partner at Nangia Global said. Further, this amendment shifts the paradigm from simple compliance to deep-dive transparency, ensuring that creditors and the Adjudicating Authority have a crystal-clear view of who they are entrusting with the corporate debtor, he added.
According to Ahuja, the amendments, about vetting resolution applicants for Section 32A immunity, prevents the misuse of legal protections meant for legitimate resolution applicants and provides clarity to the Committee of Creditors (CoC) and the courts regarding the eligibility and background of the resolution applicant..
Published on December 24, 2025
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