IBBI, in its continuing endeavour to strengthen transparency of corporate insolvency resolution process, reduction of delays and prevention value erosion of viable business segments of insolvent companies, has introduced the fourth amendment to the CIRP Regulations, 2016 (effective from 26 May 2025). This amendment –
- allows resolution professionals to invite resolution plans for the whole of the corporate debtor or for specific assets of the corporate debtor, or both.
- ensures pro rata and priority payment to dissenting financial creditors in phased resolution plans.
- requires the resolution professional to present all resolution plans, even non-compliant ones to the CoC.
- allows the CoC to invite the interim finance providers to the CoC meetings as observers without voting rights.
The asset specific resolution of a corporate debtor is likely to further the object of IBC i.e. maximisation of value of the corporate debtor and as such, ultimately benefit the creditors greatly. Further, presentation of all resolution plan including the non-compliant ones, is likely to give the CoC more options and thereby, take more strategic decisions. Furthermore, interim financers, will now have more knowledge of the operational status and needs of the corporate debtor and the same will ensure transparency.