The Insolvency and Bankruptcy Board of India (IBBI) is expected to introduce key changes in regulations post general elections in 2024, as the changes would require amendments in the Insolvency and Bankruptcy Code (IBC) to be done simultaneouslyy, an official aware of the matter told FE.
In October and November, the IBBI had floated four discussion papers dealing with: enhancing the effectiveness of Insolvency Professional Entities, strengthening the liquidation process, expediting the Corporate Insolvency Resolution Process, and real-estate insolvency.
“The changes mentioned in the discussion papers can be introduced in totality only when key amendments in the IBC are made via Parliament,” the government official said. “In the case of real-estate insolvency, in particular, the regulations can’t be made effective until the law is amended.”
The IBBI has proposed to allow the Committee of Creditors (CoC) to invite separate resolution plans for each real-estate project, which experts say would lead to faster resolution through heightened interest in the assets among potential bidders and help arrest value erosion.
Home-buyers too are likely to benefit from the proposed changes, as under the norms, even after the start of the resolution process, units will continue to be allotted to them on an ‘as is where is’ basis or on making the balance payment required to complete the construction. The board’s recommendations are generally seen as pragmatic, given the peculiar nature of the sector, where a large pool of home-buyers with limited options are major stakeholders and hold the status of financial creditors.
With regards to streamlining the CIRP and prevent delays in the execution of the resolution plans, the IBBI has proposed to structure the resolution plan in two parts – Part A will deal with inflow, that is, payments under the resolution plan, payment of insolvency resolution process cost et cetera; and Part B will deal with distribution to the various stakeholders.
