The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Liquidation Process) Amendment Regulations 2020.
The amendment clarifies that a person who is not eligible under the code to submit a resolution plan for insolvency resolution of the corporate debtor will not be a party in any manner to a compromise or arrangement of the corporate debtor under section 230 of the Companies Act 2013.
It also clarifies that a secured creditor cannot sell or transfer an asset which is subject to the security interest to any person who is not eligible under the code to submit a resolution plan for insolvency resolution of the corporate debtor.
According to an official statement on Tuesday, the amendment provides that a secured creditor who proceeds to realise its security interest will contribute its share of the insolvency resolution process cost, liquidation process cost and workmen's dues within 90 days of the liquidation commencement date.
It will also pay the excess of realised value of the asset which is subject to security interest over the amount of its claims admitted within 180 days of the liquidation commencement date.
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In case the secured creditor fails to pay such amounts to the liquidator within 90 days or 180 days as the case may be, the asset will become part of liquidation estate.
The amendment provides that a liquidator will deposit the amount of unclaimed dividends and undistributed proceeds in a liquidation process along with any income earned into the corporate liquidation account before he submits an application for dissolution of the corporate debtor.
It also provides a process for a stakeholder to seek withdrawal from the corporate liquidation account.
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