New Delhi, Feb 12 (KNN) The Insolvency and Bankruptcy Board of India (IBBI) has introduced new regulations mandating liquidators to provide fortnightly progress reports, outlining reasons for any delays in completing the liquidation process within the designated 90 or 270-day timeframe.

The amendments specifically apply to voluntary liquidations, requiring liquidators to convene meetings with contributors of the corporate entity if the liquidation is not finalised within the prescribed period.

They must present a status report within 15 days after the deadline, explaining the reasons for the delay and estimating the additional time needed to complete the process, as per IBBI.

This requirement for regular progress updates, even beyond the statutory deadlines, is aimed at enhancing efficiency by enabling better oversight, according to experts.

Hari Hara Mishra, CEO of the Association of ARCs in India, emphasised that adherence to timelines is a major challenge in Insolvency and Bankruptcy Code (IBC) proceedings.

“It is in this context, a fortnightly progress report will serve as constant reminder, as time overrun is seen in 63 per cent of voluntary liquidations”, Mishra told businessline.

Additionally, IBBI has now mandated that directors initiating voluntary liquidation must disclose any pending legal proceedings or assessments with statutory authorities, along with pending litigations.

They must also declare that sufficient provisions have been made to address potential obligations arising from these proceedings, IBBI has stated.

Furthermore, stakeholders entitled to funds in the Corporate Voluntary Liquidation Account can request withdrawal during the period between the submission of the final report and the dissolution of the corporate entity. The liquidator will verify the claim and request funds release from the IBBI for distribution.

Mishra noted that allowing payment of claims before dissolution, particularly beneficial for small entities involved in the majority of voluntary liquidations, enables reallocating resources for other purposes.

He emphasised that these changes aim to facilitate the ease of exiting business, thereby contributing to the broader ease of doing business initiative.

(KNN Bureau)