Amendments in IBC require each creditor to be informed the formula for payment of debt under resolution plan

In view of the growing number of litigations and disputes among creditors arising out of the distribution of realized amount in the resolution plan, the insolvency regulator has made amendments in the laws to make it mandatory for the resolution professional to intimate each claimant the principle or formulae for payment of debts under a resolution plan within 15 days of approval of the plan by the National Company Law Tribunal (NCLT).

The Insolvency and Bankruptcy Board of India (IBBI) has notified many amendments in the insolvency regulations to plug some of the loopholes and also make the process faster and efficient.

In another significant change, the regulator tried to remove the ambiguity around the definition of proof of default. As per earlier wordings of the regulation, the financial creditor along with the application, is required to furnish record of the default recorded with the information utility or such other record or evidence of default as may be specified. The regulation has been amended to specify ‘other record or evidence of default’ as certified copy of entries in the relevant account in the bankers’ book, and order of a court or tribunal that has adjudicated upon the non-payment of a debt.

The IBBI has also amended the regulations to specify public announcement made under the Code as financial information. It mandates the Information Utilities to disseminate the public announcement to its registered users, who are creditors of the corporate debtor undergoing insolvency proceeding. This is in addition to publishing the public announcement in the newspapers and websites as required in the Regulations.

For more transparency around the list of creditors, the IBBI has amended the regulations to require the interim resolution professional/resolution professional to submit the list of creditors on an electronic platform for dissemination on its website. Earlier, the IRP/RP was required to file the list of creditors with the Adjudicating Authority and display it on the website, if any, of the corporate. This, according to the regulator, will improve transparency and enable stakeholders to ascertain the details of their claims at a central place.