Seeking to enhance transparency in the insolvency process, the Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations.
The IBBI said in a release on Wednesday that the amendments were aimed at enhancing “the discipline, transparency, and accountability in corporate insolvency proceedings”.
A resolution professional was duty-bound to find out if a corporate debtor (CD) had been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the adjudicating authority seeking appropriate relief. This not only claws back the value lost in such transactions increasing the possibility of reorganisation of the CD through a resolution plan, but also disincentivises such transactions preventing stress to the CD, the IBBI said.
“For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions,” the board said in the release.