In a bid to streamline the insolvency framework for personal guarantors, the Insolvency and Bankruptcy Board of India (IBBI) has come out with a set of forms that makes it mandatory for resolution professionals (RPs) to file information with the board at different stages of an insolvency process involving personal guarantors.
These forms are aimed at strengthening the IBBI’s monitoring system and to inform key stakeholders about the various transactions carried out during the ongoing process.
“These forms are crucial under the insolvency and bankruptcy code (IBC) as they facilitate systematic and transparent record-keeping and seamless reporting. Their key benefits include allowing RPs to easily access and submit forms online, reducing delays, improving efficiency and minimising the likelihood of errors and omissions, ensuring more accurate and reliable information,” the circular said.
It is for the first time that the board has prescribed such forms to be filed by RPs in case of personal guarantors. A similar mechanism already exists for liquidation process and companies undergoing insolvency proceedings. “Since 2024, the cases involving personal guarantors have gone up. This has led to IBBI realising the need to develop a similar reporting format for personal guarantors,” said an insolvency expert.
From Manual Emails to Digital Efficiency
At present, RPs have to submit periodic information regarding the insolvency resolution process to the board through emails, which is time-consuming and inefficient.
“The absence of standardised forms, along with a lack of clarity regarding the designated recipients of such information, had resulted in multiple emails, often being sent to non-designated addresses. This should significantly ease the administrative burden on RPs,” said Devendra Mehta, partner at PwC.
Enhancing Accountability
The IBBI has also clarified that the RPs will have to give declaration on each of these forms, and that the timely filing of complete and accurate information along with records is going to be the sole responsibility of the RPs.
“It is clarified that an insolvency professionals (IPs) shall be liable to any action which the board may take as deemed fit under the IBC or any regulation made thereunder if inaccurate and incomplete information or records are filed in or along with a form,” the circular stated.
Though the IPs are allowed to use the modification utility provided on the IBBI’s portal to make the necessary changes.