INVOLVENCY RULES

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

The Regulations on Insolvency and Bankruptcy framed by the Insolvency and Bankruptch Board of India (Voluntary Liquidation Process) Regulations, 2017. (2) is in force since 1st April, 2017.

A process of liquidation proceedings is initiated without prejudice to section 59(2), liquidation proceedings of a corporate person if it meets the following conditions:

(a) A declaration from:

1. Majority of partners, if a corporate person is a limited liability partnership,
2. Individuals constituting the governing body in case of other corporate persons, as the case may be, verified by an affidavit.
3. The affidavit should state that
   • That a full inquiry into the affairs of the corporate person has duly been made and they have formed an opinion that either the corporate person has no debt or
   • That it will be able to pay its debts in full from the proceeds of assets to be sold in the liquidation; and
   • The corporate person is not being liquidated to defraud any person.

4. the declaration shall be accompanied with the following documents, namely: — (i) audited financial statements and record of business operations of the corporate person for the previous two years or for the period since its incorporation, whichever is later.

Reporting

The liquidator shall prepare and submit:

(a) Preliminary Report;

(b) Annual Status Report;

(c) Minutes of consultations with stakeholders; and

(d) Final Report in the manner specified under these Regulations.

The liquidator shall maintain the following registers and books, as may be applicable, in relation to the liquidation of the corporate debtor:-

(a) Cash Book;

(b) Ledger;

(c) Bank Ledger;

(d) Register of Fixed Assets and Inventories;

(e) Securities and Investment Register;

(f) Register of Book Debts and Outstanding Debts;

(g) Tenants Ledger; (h) Suits Register;

(i) Decree Register;

(j) Register of Claims and Dividends;

(k) Contributories Ledger;

(l) Distributions Register;

(m) Fee Register;

(n) Suspense Register;

(o) Documents Register;

(p) Books Register;

(q) Register of unclaimed dividends and undistributed properties deposited in accordance with Regulation 39; and

(r) such other books or registers as may be necessary to account for transactions entered into by him in relation to the corporate debtor.

The board has duly been revamped to ensure that the Bankruptcy and insolvency code, should be applied by the Indian Banks, in recovery of the daunting NPAs.