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Amendment to Liquidation Process Regulations

Insolvency and Bankruptcy Board of India vide its Notification IBBI/2018-19/GN/REG037 dated 22nd October, 2018, has notified Insolvency and Bankruptcy of India (Liquidation Process) (Second Amendment) Regulations, 2018, amending the Insolvency and Bankruptcy of India (Liquidation Process) Regulations, 2016 (principal regulations).

Important changes in principal regulations:-

1.       Regulation 32 – Sale of assets, etc.: Liquidator may sell the assets in five modes including the business(s) of the corporate debtor as going concern. However, the asset cannot be sold if there exist security interests for such assets.

2.       Regulation  35 – Valuation of assets or business(s) to be sold: If valuation is conducted under Regulation  35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or regulation 34 of the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, liquidator shall consider the average of the estimates of the values arrived under those provisions for the purposes of valuations under these regulations.

3.       Valuation, if required, shall be computed in accordance with the Companies (Registered Valuers and Valuation) Rules, 2017, after physical verification of the assets of the corporate debtor.

4.       Form – B – Public Announcement is modified.

Allowing the liquidator to consider the valuation done under CIRP or Fast Track is a welcome move.  Considering the position of corporate debtor, it is not viable and absurd to repeat the  valuation at liquidation stage too, if done during resolution process.