According to the new amendment made in Insolvency and Bankruptcy Code, the Creditors and Home-Buyers will now be able to vote on all eligible resolution plans submitted under the insolvency process simultaneously so the transparency could get increased.
The IBBI’s Insolvency Resolution Process for Corporate Persons Regulations has been amended following the government coming out with an ordinance amending the Insolvency and Bankruptcy Code (IBC) in June.
Before this amendment, the Committee of Creditors (COCs) were not able to vote on all resolution plans at the same time. The COCs have to identify the best resolution plan and approve it with or without modifications. After the amendment COCs can vote on all feasible and viable resolution plans simultaneously.
The new voting procedure after the implementation of the amended regulations have become a lengthy process-
- A resolution professional has to submit all compliant resolution plans to the Creditors Committee.
- The Committee of Creditors must then evaluate such plans as per an evaluation matrix and record its view on their feasibility and viability.
- CoC must vote on all such resolution plans simultaneously.
- In case of a single resolution plan, it will be considered as “approved” if it gets requisite votes.
- For two or more resolution plans, the plan which gets the highest, as well as the requisite number of votes, will be considered approved after simultaneous voting.
- If two or more plans get equal and requisite votes, the CoC can approve any of the plans as per a pre-determined tie-breaker formula.
- If no plan gets the requisite numbers, the CoC should again vote on the plan which received the highest votes.
The amendment also included the norms about the procedural requirements for various classes of creditors, including home buyers, and also how the creditors like allottees in a real estate project etc. are allowed to vote through an authorised representative, who acts according to the instructions given to them.
An official released by IBBI said, “Wherever the corporate debtor has classes of creditors having at least ten creditors in the class, the interim resolution professional shall offer a choice of three insolvency professionals to act as the authorised representative of creditors in each class.”
It also said, “The insolvency professional, who is the choice of the highest number of creditors in the class, shall be appointed as the authorised representative of the creditors of the respective class.”
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