Draft rules for voluntary liquidation to be finalized soon
The final set of regulations is expected to be notified before end-March
New Delhi: The voluntary liquidation process for corporate insolvency is soon to be finalized.
The third working group on bankruptcy held its final meeting on Wednesday to finalize draft regulations for fast track corporate insolvency resolution and voluntary liquidation under the Insolvency and Bankruptcy Code (IBC).
The group is likely to submit its report by Friday, a person familiar with the developments said.
The report will be then be made available for public comments.
The insolvency and bankruptcy board (IBBI), in its meeting scheduled for 16-17 March, will discuss the public feedback and finalize regulations under the code, taking stakeholder views into consideration, the person quoted above said.
The final set of regulations is expected to be notified before end-March.
Once finalized, the regulations for fast-track insolvency resolution and voluntary liquidation will complete the set of rules for corporate insolvency.
According to the provisions of the IBC, fast-track corporate insolvency resolution process shall be completed within a period of 90 days from the insolvency commencement date for companies having assets and income below a certain threshold as may be decided by the government.
The government may also allow a certain class of creditors or amount of debt to go through fast track resolution process.
“This has to take place in half the time of the normal insolvency resolution,” said Sumant Batra chairperson of law firm Kesar Dass B. & Associates.
Batra explained that voluntary liquidation is a very simple process and a solvent company can opt for it. “There should not be an occurrence of default and in case of any debt that the company has, it should be able to pay it off from the assets,” he said.
The consent of the creditors needs to be obtained to voluntarily liquidate a company, in case of debt. “The process will have minimal court intervention,” Batra added.
In case of voluntary liquidation, the law also requires members of the company to pass a special resolution in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator.
Earlier, IBBI also sought public comments on draft regulations for information utilities. The board is in the process of evaluating the feedback.
The government recently appointed three whole time members to the bankruptcy board—Mukulita Vijaywargiya, additional secretary in the ministry of law and justice, Navrang Saini, director general in the ministry of corporate affairs and Suman Saxena, former deputy comptroller and auditor general of India.
The IBBI is chaired by M.S. Sahoo.
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First Published:9 Feb 2017, 11:10 AM IST
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