New Delhi: The Insolvency and Bankruptcy Board of India (IBBI) has amended norms for the liquidation process under the IBC to allow liquidators to transfer or assign “not readily realisable assets” of the corporate debtor to any person after consultation with all stakeholders’ consultation committee.
The Insolvency and Bankruptcy Code (IBC) envisages early closure of the liquidation process so that the assets of the corporate debtor are released for alternate uses expeditiously. However, the process takes longer where the liquidation estate includes a “not readily realizable asset”.
To facilitate quick closure of the liquidation process, the IBBI brought in the Insolvency and Bankruptcy Board of India (Liquidation Process) (Fourth Amendment) Regulations, 2020 on Friday which enables the liquidator to assign or transfer a “not readily realizable asset” to any person in consultation with the stakeholders’ consultation committee.
“Not readily realizable asset” means any asset included in the liquidation estate which could not be sold through available options and includes contingent or disputed assets, and assets underlying proceedings for preferential, undervalued, extortionate credit, and fraudulent transactions.
If the liquidator fails to transfer the assets to anyone, he would have to distribute the assets amongst stakeholders, with the approval of the adjudicating authority.
“Thus, a liquidator shall attempt to sell the assets at the first instance, failing which he may assign or transfer an asset to any person, in consultation with the stakeholders’ consultation committee, and failing which he may distribute the undisposed of assets amongst stakeholders, with the approval of the AA,” said an IBBI notification.
The board also amended the regulations for the insolvency resolution process for corporate persons and information utility regulations, 2020, noting that there may be a creditor who may not be willing to wait for the completion of the liquidation process for the realization of his debt.
“The IBBI amended the Regulations to enable a creditor to assign or transfer the debt due to it to any other person in accordance with the laws for the time being in force dealing with such assignment or transfer,” said an IBBI statement.