Insolvency and Bankruptcy Board amends Liquidation Process Regulations

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Third Amendment) Regulations, 2020.
IBBI is a key institution in implementing the Insolvency and Bankruptcy Code (IBC), which provides for market-linked and time-bound resolution of stressed assets.
IBC provides for market-linked and time-bound resolution of stressed assets.
IBC handles cases under it using tribunals’ namely National Company Law Tribunal (NCLT) and Debt Recovery Tribunal (DRT).
In case the insolvency resolution process does not succeed, then the company concerned goes for liquidation.
When a company goes into liquidation under IBC, the committee of creditors (CoC) appoints a liquidator and decides on a fixed fee to be paid for their services.
A liquidator can claim fees only on the basis of the amount of work they have done during the liquidation process of a company, be it in terms of the amount realised or distributed.
The new regulations require the committee of creditors to fix the fee payable to the liquidator.
Where the fee has not been fixed by the committee of creditors, the regulations provide for a fee as a percentage of the amount realized and of the amount distributed by the liquidator.
It also amended the regulations for voluntary liquidation to enable a corporation to appoint an alternate liquidator at any point during the process through a resolution of members or partners, or contributories.