On 5th August 2020, The Insolvency and Bankruptcy Board of India (IBBI) notified voluntary liquidation process (Second Amendment) regulations, 2020 as well as regulations pertaining to the resolution process for a corporate person.
The IBBI, 2016 enables the corporate person to initiate a voluntary liquidation process if it has no debt or it will be able to pay its debts fully from the proceeds of the assets. The corporate person appoints an insolvency professional to conduct the voluntary liquidation process by a resolution of members or partners or contributors, as the case may be. However, here can be the situation that may require the appointment of another resolution professional as the liquidator.
The Amendment made to the regulations provides that the corporate person may replace the liquidator by appointing another insolvency professional as liquidator by a resolution of members or partners or contributors, as the case may be.
The Insolvency and Bankruptcy Code (IBC) regulations require the interim resolution professional to offer a choice of three insolvency professionals in the public announcement, and the creditors in a class to choose one of them to act as their authorized representative.
Now, the amendments provide that the three insolvency professionals “must be from the State or Union Territory, which has the highest number of creditors in the class as per record of the corporate debtor.”
The authorized representatives should then see voting instructions only after the circulation of minutes of meeting and vote accordingly. The official release said, “he shall, however, circulate the agenda, and may seek preliminary views of creditors in the class before the meeting, to enable him to effectively participate in the meeting.” Once the evaluation of all compliant resolution plans is done as per the evaluation matrix, the committee of creditors should vote on all compliant resolution plans simultaneously.
Whichever resolution plan receives the highest vote, but not less than 60% of voting shall be considered as approved.