New Delhi: The Insolvency and Bankruptcy Board of India on Tuesday sought public comments on a report to regulate information utilities, signalling movement on completing the ecosystem for bankruptcy resolution.
The last date for public feedback is 7 February.
Earlier, the IBBI laid down regulations for insolvency professional agencies (IPAs) and insolvency professionals (IPs), paving the way for their registration. The Insolvency and Bankruptcy Code, passed by Parliament in 2016, envisaged a complementary ecosystem comprising IPAs, IPs and information utilities to help make the process of insolvency resolution smoother.
The fourth working group on bankruptcy submitted its report on information utilities which included draft regulations and proposed amendments to the Code.
The board will also consider the report soon, said chairperson M.S. Sahoo.
Information utilities will collate all information about debtors to prevent serial defaulters from misusing the system. The corporate insolvency resolution process prescribes a time limit of 180 days to conclude proceedings. Information utilities are critical to keeping to the timelines. Information utilities will regularly release statistical information, as specified by the board.
The report also suggests amendments to the insolvency and bankruptcy code. These include replacing the term suit with ‘legal proceedings’, and record of dispute in information utilities among others. The draft regulations provided in the report enumerate rules for registration, rights and obligations of information utilities, core services and risk management by the utilities.
Draft regulations on risk management, which is important for information utilities holding critical information on firms, include provisions on insurance and indemnification.
The information provided by these utilities will be acceptable to courts as prima-facie evidence of the existence of debt, the draft report says.
The bankruptcy law reforms committee, in its report, first proposed to establish information utilities to maintain a range of information about firms, and thus avoid delays in the insolvency resolution process due to lack of data.