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IBBI Amends Regulations on Voluntary Liquidation Process

The Insolvency and Bankruptcy Board of India (IBBI) has, on January 31, 2024, amended the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 vide notification No IBBI/2023-24/GN/REG109, to streamline the process of voluntary liquidation of corporate persons.

 

The amendment provides that in the event the directors of the corporate person decide to commence the voluntary liquidation process, they must disclose any ongoing legal proceedings, litigations or assessments before statutory bodies. They must also set forth that they have set aside sufficient resources to cover any potential liabilities related to these legal disputes.

 

If the liquidator is unable to complete the liquidation of the corporate person within the specified period of either 90 days or 270 days, he must convene a meeting with the contributories of the corporate person within 15 days. He should also file a status report with the board within seven days from such meeting. The report should outline the reasons for the delay in completing the process within the designated timeframe and inform the meeting about the additional time required to complete the process.

 

Stakeholders who claim to be entitled to the funds in the Corporate Voluntary Liquidation Account can apply to the liquidator for disbursement, post submission of final report but prior to the dissolution of the corporate person. Upon receipt of request and verification of the claim by the liquidator, the Board will release the funds to the liquidator for further distribution to the stakeholders.