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The Insolvency and Bankruptcy Board of India (IBBI) has issued a fresh set of rules to fast track voluntary liquidation by companies under the Insolvency and Bankruptcy Code (IBC).
The amendments to the IBBI (voluntary liquidation process) regulations notified on Tuesday sharply cuts short the time allowed to complete various procedures, showed an official order.
For example, the timeline for distribution of liquidation proceeds to the stakeholders has been reduced from six months to 30 days from the date of receipt of amount, explained Anoop Rawat, partner (insolvency and bankruptcy) at law firm Shardul Amarchand Mangaldas & Co. Also, the company seeking voluntary liquidation has to submit a compliance certificate along with the application for dissolution.
As per the new regulations, the timeline for preparation of list of stakeholders by liquidators has been shortened to 15 days from 45, specifically in case where no claim from creditors has been received till the last date for receipt of claims, said Pritika Kumar, founder of law firm Cornellia Chambers.
New norms also say that the liquidator has to try to complete the liquidation process and submit a final report, within 270 days from the liquidation commencement date in certain cases and in 90 days in other cases. The earlier provision had provided for a blanket 12 months for the process.
The new rules clearly seek to cut short the time taken for completing the liquidation process so that whatever assets are left in the company do not lose its value.
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