IBBI notifies amendments to CIRP Regulations, 2016: Revised Compliance Certificate Format, Enhanced Flexibility and Transparency introduced

The latest amendments to the CIRP Regulations focus on several key areas:

1. Revised Compliance Certificate Format (Form H): The amendment has substituted previous Form H with a revised version that includes more comprehensive reporting requirements including:

• Timeline of key events (e.g., Committee of Creditors (CoC) constitution, resolution plan submission and approval).
• Voting details and percentage of CoC approval.
• Financial metrics such as fair value, liquidation value, and realisable amount.
• Distribution of claims and payments across various stakeholder categories.
• Disclosure of performance guarantees, source of funds, and capital restructuring.
• Details of monitoring committee and implementation timeline.
• Realisable value analysis against admitted claims, fair value, and liquidation value.
• A tabulated checklist ensuring the resolution plan complies with key provisions of the Insolvency and Bankruptcy Code (Sections 25, 29A, 30, 31) and CIRP Regulations (Regulations 38, 39), as well as eligibility criteria, feasibility, viability, and stakeholder interests.
• Status of Preferential, Undervalued, Fraudulent, and Extortionate (PUFE) transactions.
• Details of pending applications and legal issues involving the corporate debtor.
• Treatment of such transactions in the resolution plan.
• Confirmation of payment of the regulatory fee (0.25%) and timelines for obtaining necessary statutory approvals.

2. Enhanced Flexibility and Transparency in Resolution Process: The amendments also bring significant changes to streamline and improve the resolution process:

• Part-wise Resolution of Corporate Debtor: The resolution professional (RP), with the approval of the CoC, may now invite expressions of interest (EOIs) for the resolution of the corporate debtor as a whole, the sale of one or more assets, or both concurrently. This flexibility is expected to reduce timelines, prevent value erosion in viable segments, and attract a wider pool of investors.
• Harmonized Payment Timelines for Dissenting Financial Creditors: Where a resolution plan provides for payments in stages, dissenting financial creditors must be paid at least pro rata and in priority over those who voted in favour, at each stage. This ensures fair treatment of dissenting creditors, while accommodating phased implementation of plans.
• Inclusion of Interim Finance Providers in CoC Meetings: The CoC may now direct the RP to invite interim finance providers to attend CoC meetings as observers (without voting rights). This measure aims to improve transparency and help financiers make informed decisions.
• Mandatory Presentation of All Resolution Plans to CoC: RPs are now required to present all resolution plans received, including non-compliant ones, to the CoC, with relevant details. This ensures that the CoC has full visibility and can make better-informed decisions.

3. Modified Form Requirements: The amendments have substituted the previous Form requirements with updated versions to ensure more comprehensive reporting. These amendments are aimed at improving the quality of submissions to the Adjudicating Authority and enhancing the accountability of RPs, while also enhancing the efficiency and integrity of the CIRP in India.