IBBI: Changes in Voluntary Liquidation Timeframe
The Insolvency and Bankruptcy Board of India (IBBI) has notified amendments to the regulations of the voluntary liquidation process, wherein the timelines including the distribution of proceeds from realization have been reduced so that a faster exit for firms can be ensured. From 5th April 2022, these amended regulations have come into effect.
- There has been a substantial delay in the voluntary liquidation process completion.
- To curtail such delay in the future and to ensure that the firms can exit faster, the recently amended regulations have provided modified timelines for certain stipulated activities that must be undertaken during the voluntary liquidation process.
- Under the new amendments, the liquidator must transfer the proceeds of the realization to the stakeholders within 30 days after receiving the money. Previously, the time period for this was 6 months.
In India, the insolvency proceedings along with the entities such as Insolvency Professionals (IP), Insolvency Professional Agencies (IPA), and Information Utilities (IU) are overseen by the IBBI. On 1st October 2016, the IBBI was established. The Insolvency and Bankruptcy Code, which was passed by Lok Sabha on 5th May 2016 gave the statutory powers to the IBBI. The IBBI looks to simplify the insolvency process as well as the bankruptcy proceedings. Using two tribunals like the Debt recovery tribunal and the NCLT (National company law tribunal), the IBBI handles all the cases. The IBBI implements and makes rules regarding individual insolvency, corporate insolvency resolution process, individual bankruptcy, and corporate liquidation. The headquarter of IBBI is in New Delhi.
Category: Economy & Banking Current Affairs - 2024