RECENT AMENDMENTS TO IBC REGULATIONS – PART IV (ii)

In this article we may see which provisions of the Liquidation Process regulations are substituted by new ones. More than 45 such changes are made to these regulations.

Forms

The amendments substituted the forms that are to be used in these regulations but a new set of forms have not been prescribed. Instead, forms may be notified by IBBI through its circulars. In respect of Liquidation proceedings, the following forms are to replaced by forms as prescribed-

• Regulation 12(1) – Form B;
• Regulation 17(1) – Form C;
• Regulation 18(1) – Form D;
• Regulation 19 – Form E and F;
• Regulation 20(1) – Form G;
• Regulation 21A(1) – Form C and D of Schedule II;
• Regulation 46 – Form I;

Definitions

The amendment substituted the definition of the term ‘Committee’ against the existing definition on ‘Consultation Committee’. The newly substituted term ‘Committee’ is defined under Regulation 2(ba) as a committee of creditors constituted under section 21.

Contributions to liquidation costs

The amendment substituted Regulation 2A for the existing one. The new Regulation provides that the liquidator may call upon the members of the committee to contribute the excess of the liquidation costs over the liquid assets of the corporate debtor, as estimated by him, in such manner and subject to such terms and conditions as approved by the committee.

Liquidator fee

The amendment substituted the present liquidation fee by a new one. As per the amendment the liquidator’s fee is as detailed below-

• The committee may fix the fee of the liquidator in the first meeting after the appointment of liquidator during the liquidation process, in accordance with of section 34 (8).
•  If the committee has not fixed the fee as above, the fee as a percentage of the amount distributed to the stakeholders, for the balance period of liquidation, will be as under:

The explanation clarified that the requirements of this regulation shall apply to the liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Fourth Amendment) Regulations, 2026, i.e., 02.06.2026.

Reporting

The amendment substituted a new regulation for 5(1). The newly substituted Regulation 5(1) provides that the liquidator shall prepare and submit the following-

• Progress report(s); and
• The first report prior to dissolution,

to the Adjudicating Authority in the manner specified by these regulations.

Regulation 5(3) after substitution of the words ‘make the report’ for the words ‘make the reports and minutes’. After substitution Regulation 5(3) provides that subject to other provisions of these Regulations, the liquidator shall make the reportsreferred to sub-regulation (1) available to a stakeholder in either electronic or physical form.

Committee of Creditors

The amendment substituted new regulations 8, 8A and 8B for 8 dealing with Committee of creditors, facilitation to transfer assets and Replacement of liquidator respectively. The newly substituted Regulation 8 provides the following-

• The committee of creditors constituted under section 21 shall continue to function during the liquidation process.
• a secured creditor who has not relinquished his security interest under section 52 shall not be part of the committee.
• with reference to Explanation in clause (b) in sub-section (1) of section 53, the creditor whose value of debt remains and is considered as unsecured creditor shall be a part of the committee for the remaining portion of debt and shall have the voting rights to the value of the remaining debt.
• the value of security interest shall be the liquidation value determined in accordance with Regulation 35.
• The provisions of regulations 18 to 26 of Chapter VI and Chapter VII of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall apply mutatis mutandis to meetings of the committee under liquidation proceedings
• the first meeting of the committee shall be convened within seven days of liquidation commencement date.
• In every meeting, the liquidator shall present to the committee:

•  the actual liquidation cost along with reasons for exceeding the estimated cost, if any;
•  the consolidated status of all the legal proceedings; and
• the progress made in the process.

• The liquidator shall not undertake the following without the prior approval of the committee:

• appointment and remuneration of professionals appointed under regulation 7;
• fees of the liquidator;
•  liquidation costs;
•  valuation under sub- regulation (2) of regulation 35;
• continuation or institution of any suits or legal proceedings by or against the corporate debtor;
• extension of payment of balance sale consideration as provided in clause (12) of Para 1 of Schedule I, beyond ninety days, to be disclosed in the auction notice;
• appropriate arrangement for pursuing any suit or proceedings with regard to distribution of proceeds in reference to sub-section (1B) of section 54;
• any other matter or activity relating to the liquidation process except those listed in sub-regulation (5), as may be decided by the committee.

• The liquidator shall not undertake the following without the prior approval of the committee obtained by a voting share of not less than sixty-six per cent., in matters relating to:

• sale under regulation 32, including manner of sale, pre-bid qualifications, reserve price, marketing strategy and auction process;
•  the manner in which proceedings in respect of preferential transactions, undervalued transaction, extortionate credit transaction or fraudulent or wrongful trading, if any, shall be pursued after dissolution of the corporate debtor and the manner in which the proceeds, if any, from these proceedings shall be distributed; and
•  assignment of not readily realisable assets.

• The committee shall have access to all relevant records and information as may be required by the committee.
• The authorised representative, appointed during the corporate insolvency resolution process, shall continue to act as the authorised representative of such creditors in the liquidation process and the provisions of sub-regulations (3A) to (12) of regulation 16A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall apply mutatis mutandis.

Facilitation of transfer of assets

Regulation 8A provides for facilitation of transfer of assets. The said Regulation provides-

• Where the corporate debtor is a corporate guarantor undergoing a liquidation process, the liquidator of such corporate debtor which has given the corporate guarantee shall coordinate with the resolution professional of the corporate debtor to whom such guarantee has been given, regarding transfer of asset in the corporate insolvency resolution process of the corporate debtor to whom such guarantee has been given.
• For the purposes of section 28A, the liquidator shall obtain approval from the committee of the corporate debtor which has given the corporate guarantee for transfer of asset in the corporate insolvency resolution process of the corporate debtor to whom such guarantee has been given.
•  Where approval is granted by the committee of the corporate debtor as corporate guarantor permitting the transfer, the liquidator of such corporate debtor shall ensure that the proposed transfer is appropriately disclosed in the progress report and asset memorandum.

Replacement of liquidator

The new Regulation 8B provides that the committee may by a vote of not less than sixty-six per cent., propose to replace the liquidator and shall file an application, after obtaining the written consent of the proposed liquidator in such format as notified by the Board, before the Adjudicating Authority for replacement of the liquidator. Where a liquidator is proposed to be replaced, he shall continue to work till his replacement.

Preliminary report

Regulation 13 (1) provides that the liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy five days from the liquidation commencement date.

The amendment substituted the words ‘Committee’ for the words ‘Adjudicating Authority’ and ‘thirty’ for the words ‘seventy-five’.

Early dissolution

Regulation 14 deals with the early dissolution of the corporate debtor. The Amendment substituted the words - he shall place the agenda in this regard before the committee and if it decides by a voting share of not less than sixty-six per cent. for early dissolution, he shall apply, along with a detailed report incorporating the decision of the committee, to the Adjudicating Authority for early dissolution of the corporate debtor and for necessary directions in respect of such dissolution’ for the words-

‘he shall consult the consultation committee and if it advises for early dissolution, he may apply, along with a detailed report incorporating the views of the consultation committee, to the Adjudicating Authority] for early dissolution of the corporate debtor and for necessary directions in respect of such dissolution.’

Progress reports

Regulation 15(1) provides that the liquidator shall submit Progress Reports, in the format stipulated by the Board, to be placed before the committee the Adjudicating Authority and the Board (newly inserted).

The amendment substituted a new Regulation for Regulation 15(2) which provides that a progress report for every quarter including the following-

(i) minutes of meetings of the committee,

(ii) asset memorandum,

(iii) sale report(s),

(iv) settlement of list of stakeholders,

(v) details of any property that remains to be sold and realised,

(vi) distribution made to the stakeholders, and

(vii) distribution of unsold property made to the stakeholders.

The amendment substituted the following illustration in Regulation 15(5) for the existing illustration-

Illustration: An insolvency professional becomes a liquidator on 13th February, 2026, and ceases to act as liquidator on 12th June, 2026. He shall submit Progress Reports as under:

He shall submit the audited accounts of his receipts and payments as under:

Submission of Claims

After incorporating the amendments as substitution of words, the Regulation 16 provides the following-

(1) A person, who claims to be a stakeholder, shall submit its claim where not submitted during the corporate insolvency resolution process as on insolvency commencement date, within fourteen days of the liquidation commencement date.

(2) A person shall prove its claim for debt or dues to him,  for the newly submitted claims, if any, as on the insolvency commencement date.

Relinquishment of security interest

The proviso to Regulation 21A (1) where a secured creditor does not intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall be presumed tothe liquidation estate.

The amendment substituted the words ‘fourteen days’ for thirty days and ‘deemed to be relinquished’ for the words ‘presumed’.

Regulation 21A (2) provides that where a secured creditor proceeds to realise its security interest, it shall pay -

1. as much towards the amount payable under clause (a) and sub-clause (i) of clause (b) of subsection (1) of section 53, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date; and
2. the excess of the realised value of the asset, which is subject to security interest, over the amount of his claims admitted, to the liquidator within one hundred and eighty days from the liquidation commencement date.

The amendment substituted the word ‘forty-five for the word ‘ninety’ and ‘ninety’ days for ‘one hundred and eighty’.

Debts payable at a future date

Regulation 28(1) provides that a person may prove for a claim whose payment was not yet due on the liquidation commencement date and is entitled to distribution in the same manner as any other stakeholder.

The amendment substituted the words ‘insolvency commencement date’ for the words ‘liquidation commencement date’.

Verification of the claims

The amendment substituted a new regulation 30 for the existing regulation. The newly substituted regulation 30 provides the following-

(1) The liquidator shall verify the claims received under sub-regulation (1) of regulation 16, within seven days of receipt of claim and may either admit or reject the claim, in whole or in part, as the case may be.

(2) The liquidator shall also verify the claims which were received but were not verified during the corporate insolvency resolution process, within seven days of the liquidation commencement date and may either admit or reject the claim, in whole or in part, as the case may be:

Provided that the liquidator shall not re-verify the claim, which has already been verified during the corporate insolvency resolution process:

Provided further that where the liquidator rejects a claim, he shall record in writing the reasons for such rejection.

(3) The liquidator shall communicate his decision of admission or rejection of claims along with reasons, to the stakeholder within seven days of such admission or rejection of claims.

List of Stakeholders

Regulation 31(2) provides that the liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of the claims.

The amendment substituted the word ‘thirty’ for the words ‘forty-five’.

Mode of sale

The amendment substituted a new Regulation 33(2) for the existing one. The newly substituted Regulation 33(2) provides that the liquidator may sell the assets of the corporate debtor by means of private sale only after prior approval of the committee with voting share of 66% in the manner specified in Schedule I when -

(a) the asset is perishable;

(b) the asset is likely to deteriorate in value significantly if not sold immediately; or

(c) the permission of the Adjudicating Authority has been obtained for such sale:

Provided that the liquidator shall not sell the assets, by way of private sale to-

(a) a related party of the corporate debtor;

(b) his related party; or

(c) any professional appointed by him.

Asset Memorandum

Regulation 34(1A) provides that for cases covered under sub-regulation (2) of regulation 35, the liquidator shall prepare an asset memorandum in accordance with this Regulation withinseventy-five days from the liquidation commencement date.

The amendment substituted the words ‘forty five days’ for the words ‘seventy five days’.

Regulation 34(4) provides that the liquidator shall file the asset memorandum along with the preliminary report to the Adjudicating Authority.

The amendment substituted the word ‘progress’ for the word ‘preliminary’.

Valuation of assets or business intended to be sold

The amendment substituted a new Regulation 35(2) for the existing one. The newly substituted amendment provides that in cases not covered under sub-regulation (1) or where the committee, is of the opinion that fresh valuation is required under the circumstances, the liquidator shall within seven days of the liquidation commencement date, appoint two registered valuers to determine the realisable value of the assets under regulation 32 of the corporate debtor:

Provided that the following persons shall not be appointed as registered valuers, namely: -

(a) a relative of the liquidator;

(b) a related party of the corporate debtor;

(c) an auditor of the corporate debtor at any time during the five years preceding the insolvency commencement date; or

(d) a partner or director of the insolvency professional entity of which the liquidator is a partner or director.

Realisation of secured interest by secured creditor

Regulation 37(2) provides that the liquidator shall inform the secured creditor within twenty one days of receipt of the intimation under sub-regulation (1) if a person is willing to buy the secured asset before the expiry of thirty days from the date of intimation under sub-regulation (1), at a price higher than the price intimated under sub-regulation (1).

The amendment substituted the word ‘seven’ for the words ‘twenty-one’ and substituted the word ‘fourteen’ for the word ‘thirty’.

Assignment of non-readily realisable assets

Regulation 37A (1) provides that a liquidator may assign or transfer a not readily realisable asset through a transparent process, in consultation with the committee, for a consideration to any person, who is eligible to submit a resolution plan for insolvency resolution of the corporate debtor.

The amendment substituted the words ‘with the prior approval of’ for the words ‘in consultation with the’.

All money paid into bank account

Regulation 41(3) provides that the liquidator may maintain a cash of one lakh rupees or such higher amount as may be permitted by the Adjudicating Authority to meet liquidation costs.

The amendment substituted the word ‘committee’ for the words ‘Adjudicating Authority’.

Distribution

Regulation 42(2) provides that the liquidator shall distribute the proceeds from realization within ninety days from the receipt of the amount to the stakeholders.

The amendment substituted the words ‘fifteen days’ for the words ‘ninety days’.

Completion of liquidation

Regulation 44(1) provides that the liquidator shall liquidate the corporate debtor within a period of one year from the liquidation commencement date, notwithstanding pendency of any application for avoidance of transactions under Part II of the Code, before the Adjudicating Authority or any action thereof.

The amendment substituted the words ‘one hundred and eighty days’ for the words ‘one year’.

Regulation 44(2) provides that if the liquidator fails to liquidate the corporate debtor within one year, he shall. on receiving an instruction from the committee under this regulation make an application to the Adjudicating Authority to continue such liquidation, along with a report explaining why the liquidation has not been completed and specifying the additional time that shall be required for liquidation.

The amendment substituted the words ‘one hundred and eighty days’ for the words ‘one year’.

The explanation to Regulation 44(2) provides that in relation to the liquidation processes commenced prior to the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019, the requirements of this regulation as existing before such commencement, shall apply.

The amendment substituted the words ‘Insolvency and Bankruptcy of India (Liquidation Process) (Fourth Amendment) Regulations, 2026’ for the words ‘Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019.

Treatment of Avoidance of transaction

Regulation 44A provides that the liquidator shall, on the advice of the committee, provide in the application along with the final report filed under regulation 45 for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the dissolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed.

The amendment substituted the words ‘with the approval’ for the words ‘on the advice’.

Final report prior to dissolution

The amendment substituted Regulation 45(2) for the existing one. The new regulation provides that the liquidator shall submit an application along with the final report and the compliance certificate in such format as notified by the Board to the Adjudicating Authority for the dissolution of the corporate debtor or closure of the liquidation process.

Model time line for liquidation process

The amendment substituted a new Regulation 47 for the existing one. The new Regulation 47 provides that the following Table presents a model timeline of liquidation process of a corporate debtor from the liquidation commencement date, assuming that the process does not include compromise or arrangement under section 230 of the Companies Act, 2013 :

Model Timeline for Liquidation Process

[AA: Adjudicating Authority, LCD: Liquidation Commencement Date]

Amendments of Schedule I

The amendment made the following substitution of words for the existing one-

• Clause 1B - The liquidator shall issue public notice for the next auction, in case of failure of the auction, within fifteen days from the last failed auction unless the committee advises to deviate from the specified time period.

The amendment substituted the word ‘decides’ for the word ‘advises’.

• Clause 12C - The liquidator shall declare the highest bidder as the successful bidder or reject such bid, after consultation with the consultation committee under regulation 31A.

The amendment substituted the words ‘the approval of the committee with voting share of sixty-six percent’ for the words ‘consultation with the consultation committee’.

• Clause 12-E - In case the highest bidder is found ineligible, the liquidator may, in consultation with the consultation committee, declare the next highest bidder as the successful bidder after following the same process as provided under clause (12A) to clause (12E).

The amendment substituted the words ‘the liquidator may, with the approval of the committee with voting share of sixty-six per cent.’ for the words ‘the liquidator may, in consultation with the consultation committee’.

• Clause 2 – (3A) - The private sale shall be confirmed to the buyer after consultation with the consultation committee under regulation 33.

The amendment substituted the words ‘in compliance with regulation 33’ for the words ‘after consultation with the consultation committee under regulation 33’.

(continued)