The public can now help modify the regulations already put in place by the insolvency regulator Insolvency and Bankruptcy Code of India (IBBI) during the last five years since the enactment of the Insolvency and Bankruptcy Code (IBC).

The regulator has now resorted to crowdsourcing of ideas to understand the important issues in the extant regulatory framework that hinder transactions and has sought alternative solutions to address them. This window will be open for comments from the public, including stakeholders, between June 17 and December 30 and the regulator intends to notify modified regulations by March 31 next year and bring them into force from April 1.

Such an exercise is seen as noteworthy by stakeholders of the insolvency ecosystem as it would enable every idea to reach the regulator.

It has been the endeavour of the IBBI to effectively engage stakeholders in the regulation making process. The process factors in ground realities, secures ownership of regulations and produces regulations robust and precise, relevant to the market needs at a particular time.

Till date, the IBBI has come up with about 13 regulations around various aspects of IBC framework. So far, the IBBI has introduced a corporate insolvency resolution process and the regime around individual insolvency is yet to be implemented fully, although provisions around personal guarantors have been put into effect.

Public comment

Corporate and insolvency law experts feel that a lot of representation for regulatory change may come about in areas like Section 29A (ineligibility of promoters to submit resolution plans) and insolvency of personal guarantors etc.

Harish Kumar, Partner, L&L Partners, a law firm said that the expected public comments/representations are likely to revolve around various issues such as differential treatment under Sec 29A for defaulting promoters under different framework (restricted for CIRP/schemes of arrangements for corporate debtors in general but allowed for MSMEs under pre-pack framework or otherwise); permissibly of group insolvency; withdrawal of insolvency proceedings through settlement process under blessings of the NCLT/NCLAT even post submission of EOIs; and issues concerning multiple CIRP proceedings against principal borrower and its corporate guarantor(s).

Aseem Chawla, Managing Partner, ASC Legal, a law firm, said: “Better focus on the functioning of the Committee of Creditors and a professional approach in conceptualization of a resolution plan are important areas requiring consideration. Further with the ever increasing disciplinary cases the code of conduct relatable to resolution professionals equally requires some serious attention.”

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