IBBI draft norms aim to fix gaps in resolution process

NCLT TO BE SOLE ARBITER FOR DISPUTES ON DELAYED CLAIMS

- MANU KAUSHIK

THE INSOLVENCY AND Bankruptcy Board of India (IBBI) has proposed a series of changes in the regulatory rules aimed at plugging gaps in insolvency costs and the treatment of delayed claims.

The new proposed modifications are also expected to bring more transparency to how the committee of creditors (CoC) approves resolution plans.

Through a discussion paper, the board said that even though the commercial wisdom of the CoC remains supreme in approving resolution plans, certain factors — such as expected recovery versus liquidation value, fair market value, credibility and track record of resolution applicants — must be formally recorded in the CoC’s meeting while evaluating resolution plans.

The enhanced documentation is expected to make the CoC’s decision-making more transparent, and provide evidentiary support in the event of judicial scrutiny.