In a significant move, insolvency regulator IBBI has introduced the concept of the appointment of an “interim representative” who will act as the representative of the class of creditors during the period when authorised representative appointment is under consideration of NCLT for approval.
An amendment to this effect has been made by the Insolvency and Bankruptcy Board of India (IBBI) to the Corporate Insolvency Resolution Process (CIRP) regulations.
The interim representative will have the same rights and duties as an authorised representative in meetings of the committee of creditors, IBBI has said.
The amended regulations have been effective from September 24, 2024.
The amendments aim to facilitate the effective representation of certain classes of creditors which are large in numbers, such as homebuyers, during the corporate insolvency resolution process, IBBI has said.
‘Amended regulation seeks to fill up the void’
Hari Hara Mishra, CEO, Association of ARCs in India, said that the amended regulation seeks to fill up the void. It would pave the way for an interim representative to take care of select class of creditors like homebuyers, pending appointment of authorised representative by adjudicating authority. “This measure will help in representing and safeguarding home buyers interest from beginning of the resolution process”, Mishra said.
Siddharth Srivastava, Partner at Khaitan & Co, said that the essential clarification brought about by the latest amendments to CIRP Regulations is the addition of proviso to Regulation 16A(2) which now entitles the authorized representative of the class of financial creditors to attend the meetings of the CoC as an interim representative while the application for his appointment is pending for consideration before the adjudicating authority.
The inclusion of this proviso shall put to rest the conundrum faced due to procedural delays in appointment of the AR which in turn either delays the first CoC meeting or prevents the presentation of interest of such financial creditors in the CoC till the AR appointment is confirmed, he added.
Sonam Chandwani, Managing Partner, KS Legal, said “By rejecting late submissions of Form CA and allowing an interim representative to step in while the final one is being approved, it cuts down on waiting times that typically slow things down. These changes are aimed at speeding up the insolvency resolution process by ensuring that a representative for financial creditors is appointed without unnecessary delays making the process more efficient and avoiding any gaps in decision-making during crucial stages”