The bankruptcy and bankruptcy boards have amended the rules on the liquidation process to streamlinom the auction process, improve reporting requirements and ensure better fund management.
The notified amendments on January 28, 2025 with immediate effect revised India’s Insolvency and Insolvency Board (LBC) Regulations, 2016, and Insolvency and Insolvency Board of India (voluntary liquidation procedure) rules, according to 2017, 2017 free .
These measures will strengthen transparency, efficiency and accountability in insolvency framework.
Under the revised structure, future bidders in the liquidation auction will now have more time to participate in the auction process 14 days ago, providing comprehensive participation facilities, the insolvency and bankruptcy board said.
In addition, the liquidator is mandatory to consult with the stakeholder counseling committee before verifying the eligibility of the highest bidder within three days of the auction and finalizing the auction.
If the highest bidder is found to be disqualified, the next highest character bidder may be considered. Additionally, the auction notice must specify that the successful bidder’s earnest money deposit will be found to be disqualified.
The board has also strengthened fund management mechanisms, which maintains corporate liquidation account and corporate voluntary liquidity account with banks scheduled for more efficient claim processing.
In addition, voluntary liquidation processes can still be completed even if unwanted capital exists, as existing security measures are considered sufficient for the safety of creditors.
Amendments also offer late fee of Rs 500 per form per month for delayed filing on the IBBI portal, which ensure timely compliance by bankrupt professionals.
The board said, “Rules now require detailed disclosure of tax deduction by the liquidator before depositing unclaimed dividends and an undesirable income in corporate liquidation account or corporate voluntary liquidation account,” said the board.
Forms have been updated to include the reasons of tax deduction, implemented provisions, and unclaimed dividends or reasons for undivided income.
These measures will strengthen the insolvency ecosystem by addressing emerging challenges and ensuring more efficiency and transparency in liquidation proceedings.
,
