More responsibilities likely for authorised representatives of homebuyers

The insolvency regulator has proposed to increase the duties of Authorised Representatives (AR) of homebuyers in the Committee of Creditors. The regulator proposes that the authorised representative should the members represented by him in understanding the issues discussed in CoC meetings and help them in taking a considered decision, and also help them evaluate the resolution plans submitted by the resolution applicants.

In a discussion paper released by the Insolvency and Bankruptcy Board of India (IBBI), the regulator says that there has been continuous demand from the homebuyers that the duties of the authorised representatives should be increased so that he can be a catalyst in removing the difficulties being faced by them in understanding the matters related to CoC, in making decision, in getting relevant information for matters related to CoC meetings and their interactions with NCLT and NCLAT.

It proposes to amend the Regulation 16A of CIRP Regulations to add the following responsibilities of Authorised Representatives during CIRP:

a) Help the members represented by him in understanding the issues discussed in CoC meetings and help them in taking a considered decision. This duty ensures that the creditors in a class fully understand the discussions and considerations happening in the Committee of Creditors (CoC) meetings, leading to more informed decision-making. This is crucial because homebuyers might not be familiar with the technical details and jargon of the insolvency process. The AR should also review the contents of minutes prepared by the RP to ensure correctness and completeness.

b) Helping the RP to increase the marketability of the assets of the CD. An AR’s involvement can be valuable in enhancing the marketability of the CD’s assets. This is especially relevant where the members of the committee have taken measures for marketing of the assets of the corporate debtor.

c) Helping the members represented by him to evaluate the resolution plans submitted by the resolution applicants. Given the complexity of resolution plans, this duty helps the creditor in a class make informed decisions about the plans.

d) Communicating with the RP and providing members represented by him with any information or documents required for taking a considered view on the issues in CoC meetings. This duty is necessary to bridge any communication gap between the RP and the FCs, facilitating timely information exchange and decision-making.

e) Providing updates on the status of the CIRP to the members represented by him as regular updates ensure transparency and keep creditors informed about the progress of the resolution process, contributing to trust and efficiency in the process.

f) Representing the members represented by him in their interactions with the National Company Law Tribunal, National Company Law Appellate Tribunal and other regulatory authorities. This role is vital because the creditors in a class might lack the necessary understanding of legal and regulatory matters. This duty simplifies their interactions with adjudicatory and regulatory bodies.

g) Recording minutes of such meetings with the creditors in class by AR. Recording of minutes and obtaining approval of the creditors in class on such minutes will ensure record keeping about the items discussed in such meetings.

h) Helping in modification of resolution plan as desired by the members of CoC he is representing. Given their close involvement in the CIRP, authorised representatives can assist in adapting the resolution plan to better suit the needs and preferences, leading to a more acceptable and successful resolution plan for the creditors in a class he represents.

Increase of fee of Authorised Representative

The regulator also proposes to increase the fee of the AR to be commensurate with the increased
duties. It is also proposed to provide a fee separately for meeting of creditors in class with the
AR. The proposed fee adjustment for meetings convened specifically for a particular class of
creditors with the AR also acknowledges this increased responsibility and the enhanced value
the AR provides in such CIRPs.

Proposed Fee

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