New Delhi, Feb 3 (PTI) – The Insolvency and Bankruptcy Board of India (IBBI) has introduced key amendments to the liquidation process regulations, aimed at refining the auction procedure, strengthening reporting standards, and improving fund management. These changes, notified on January 28, 2025, have been enforced with immediate effect.
The modifications impact the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, and the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Rules, 2017, according to an official release.
Key Amendments for Auction Process
To encourage wider participation in liquidation auctions, the revised regulations extend the time available for prospective bidders to participate from 14 days to 30 days. Additionally, the liquidator is now required to verify the eligibility of the highest bidder within three days of the auction and consult with the Stakeholder Consultation Committee (SCC) before finalizing the process.If the highest bidder is deemed ineligible, the next highest eligible bidder may be considered. The auction notice must now explicitly state that the Earnest Money Deposit (EMD) of the successful bidder will be forfeited if they are found ineligible.
Strengthened Fund Management Mechanisms
IBBI has also reinforced fund management measures by ensuring that both the Corporate Liquidation Account and Corporate Voluntary Liquidation Account are maintained with scheduled banks. This will facilitate smoother claim processing and improve overall financial oversight in liquidation proceedings.Furthermore, voluntary liquidation processes can now proceed even if uncalled capital exists, as current safeguards are considered adequate for creditor protection.
New Compliance and Reporting Measures
To ensure timely compliance, a late fee of ₹500 per form per month has been introduced for delayed filings on the IBBI portal. Additionally, regulations now mandate detailed disclosures regarding tax deductions by the liquidator before depositing unclaimed dividends and undistributed proceeds into the relevant liquidation accounts.Updated forms now include fields for tax deduction confirmation, applicable legal provisions, and explanations for unclaimed dividends or undistributed proceeds.