• Recently, the Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
  • The amendments are aimed at enhancing the discipline, transparency, and accountability in corporate insolvency proceedings.
  • In March 2021 a sub-committee of the Insolvency Law Committee (ILC) recommended a pre-pack framework within the basic structure of the Insolvency and Bankruptcy Code (IBC), 2016.

Important points:

  • The amendment requires an Insolvency Professional (IP) conducting Corporate Insolvency Resolution Process (CIRP) to disclose all former names and registered office address(es) so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the Corporate Debtor (CD), in all its communications and records.
  • CIRP includes necessary steps to revive the company such as raising fresh funds for operation, looking for a new buyer to sell the company as a going concern, etc.
  • CD is any corporate organization which owes a debt to any person.
  • A CD may have changed its name or registered office address prior to commencement of insolvency. Therefore the stakeholders may find it difficult to relate to the new name or registered office address and consequently fail to participate in the CIRP.


  • The amendment provides that the Interim Resolution Professional (IRP) or Resolution Professional (RP) may appoint a professional, other than registered valuers, if he is of the opinion that the services of such professional are required and such services are not available with the CD.
  • Such appointments shall be made on an arm’s length basis following an objective and transparent process.
  • The RP is duty bound to find out if a CD has been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the Adjudicating Authority seeking appropriate relief.


It would allow stakeholders to claw back lost value and would disincentive stakeholders from entering into such transactions.

Insolvency and Bankruptcy Code

  • The IBC was enacted in 2016.
  • To streamline and speed up the resolution process of failed businesses.
  • To consolidate provisions of the existing legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.
  • To stipulate that the resolution process of a stressed company will have to be completed in a maximum of 270 days.

Institutions to Facilitate Resolution of Insolvency:

  • These professionals administer the resolution process, manage the assets of the debtor, and provide information for creditors to assist them in decision making.
  • The agencies conduct examinations to certify the insolvency professionals and enforce a code of conduct for their performance.
  • Creditors will report financial information of the debt owed to them by the debtor. Such information will include records of debt, liabilities and defaults.
  • The proceedings of the resolution process are adjudicated by the National Company Law Tribunal (NCLT), for companies; and the Debt Recovery Tribunal (DRT), for individuals.
  • The duties of the authorities will include approval to initiate the resolution process, appoint the insolvency professional, and approve the final decision of creditors.

Insolvency and Bankruptcy Board:

  • It is a key pillar of the ecosystem responsible for implementation of the Code.
  • It regulates insolvency professionals, insolvency professional agencies and information utilities set up under the Code.
  • The Board consists of representatives of the Reserve Bank of India, and the Ministries of Finance, Corporate Affairs and Law.

Insolvency Resolution Process

  • It can be initiated by any of the stakeholders of the firm (debtors/creditors/employees). If the adjudicating authority accepts, an IP is appointed.
  • The power of the management and the board of the firm is transferred to the Committee of Creditors (CoC). They act through the IP.
  • The IP has to decide whether to revive the company (insolvency resolution) or liquidate it (liquidation).
  • If they decide to revive, they have to find someone willing to buy the firm.
  • The creditors also have to accept a significant reduction in debt. The reduction is known as a haircut.
  • They invite open bids from the interested parties to buy the firm.
  • They choose the party with the best resolution plan, that is acceptable to the majority of the creditors (75% in CoC), to take over the management of the firm.


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