The insolvency regulator has sought public comments on all the legislation so far under the Code. This is likely to result in a complete overhaul of the Insolvency and Bankruptcy Code (IBC). The Insolvency and Bankruptcy Board of India (IBBI) has given 8 months time to all the stakeholders to give their opinion on all its regulations, which will end on 31 December.
IBBI has named this exercise as ‘Crowdsourcing of Ideas’. The insolvency regulator has also said that it will study all the responses together and make necessary changes in the rules following certain procedures.
IBBI is expecting that after taking and considering the feedback from all the stakeholders, the rules will be amended by March 31, 2024 and they can be implemented from April 1, 2024. Inviting public feedback, IBBI said that consultation with the public, especially those involved in insolvency, would ensure that stakeholders and those affected by the regulations are informed about the legal requirements.
“In a dynamic environment, despite best efforts and intentions, it is possible that the regulator may not be able to respond to ground realities in such a new and evolving regulatory environment,” IBBI said.
Terming it as a step in the right direction, industry representatives said that this would lead to a complete change in IBBI regulations and would restore confidence in the performance of IBC.
Harihar Mishra, CEO, ARC Association, said, “In the 2023 budget speech, the Finance Minister had talked about a comprehensive review of the existing rules after consultation with all the stakeholders, citing several financial regulators. There have been some new challenges in the IBC in recent times.
The rules on which IBBI has sought public comments include Insolvency Resolution Process for Corporate Persons, Liquidation Process, Faster Insolvency Resolution Process for Corporate Persons, Personal Guarantee for Corporate Borrowers Insolvency process for lenders etc.
Manoj Kumar, Partner, Corporate Professionals, said, “IBC law is rapidly evolving based on various judicial decisions, common situations in companies, etc. Government and regulators take steps and make amendments according to progress in this area. Now the regulator IBBI wants to review all the rules in one go. It is a better idea to have a complete reform of the rules than to make small changes.
Stakeholders may give their opinion regarding any difficulty or discrepancy in the implementation of all the provisions contained in these Regulations. They can also make specific comments on any regulation.