RECENT AMENDMENTS TO IBC REGULATIONS – PART IV (iii)

In this article we may see the new insertions made by the amendments in the IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026.

Compromise and arrangement

Regulation 2B provides for the procedure for compromise and arrangement during the course of liquidation. The Amendment inserted fourth proviso to Regulation 2B (1). The newly inserted Fourth proviso provides that no compromise or arrangement under section 230 of the Companies Act, 2013 shall be filed by the liquidator unless-

1.  such compromise or arrangement has been approved by requisite majority of creditors as provided in sub-section (6) of section 230 of the Companies Act, 2013; and
2. the amount realisable to the creditors under the proposed compromise or arrangement is higher than the liquidation value determined as on the insolvency commencement date.

Recommendation of liquidator by Committee of Creditors

The amendment inserted a new regulation 3A.  The newly inserted regulation 3A provides the following-

1. For the purposes of sub-section (1) of section 34 of the Code, the committee shall, prior to the passing of the order for liquidation, recommend the name of an insolvency professional from the panel of insolvency professionals prepared by the Board in this regard, for appointment as liquidator.
2. The recommendation under sub-regulation (1) shall be made by a vote of not less than sixty-six per cent. of the voting share of the committee.
3. Upon receipt of the recommendation under sub-regulation (2), the Adjudicating Authority shall consider such recommendation while appointing the liquidator.

Appointment of professionals

Regulation 7 provides for the appointment of professionals.  Regulation 7(1) after insertion of the words ‘with the approval of the Committee’ provides that a liquidator may appoint professionals with the approval of the committeeto assist him in the discharge of his duties, obligations and functions for a reasonable remuneration and such remuneration shall form part of the liquidation cost.

Personnel to extend cooperation to the liquidator

Regulation 9 requires the personnel of the corporate debtor to extend P9(1)(a) – or any other person referred to in sub-section (3) of section 34’.  The Regulation 9(1)(a), after insertion of the said words provides that the liquidator may make an application to the Adjudicating Authority for a direction that a person who-

1. is or has been an officer, auditor, employee, promoter or partner of the corporate debtor or any other person referred to in sub-section (3) of section 34.

Progress report

Regulation 15(1) provides for submission of progress report by the liquidator before the Committee in the form stipulated by the Board.  The amendment inserted the words ‘be placed before the Committee’.

Submission of claims

Regulation 16 provides for the submission of claims by the creditors to the liquidator.  The amendment inserted a new Regulation 16(3) which provides that a stakeholder shall update its claim as and when the claim is satisfied, partly or fully, from any source in any manner, after the insolvency commencement date.

Relinquishing of security interest

The amendment inserted time line in Regulation 21A(1) in informing the liquidator by the security creditor of its decision to relinquish its security interest to liquidation estate or realised its security interest within 14 days.

The amendment inserted an explanation to Regulation 21A which clarifies 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) (Amendment) Regulations, 2019.

Sale of assets

Regulation 32 provides for the sale of assets by the liquidator in any one of the methods mentioned in sub clause (1).  The amendment inserted a clarification to this Regulation which provides that the liquidator shall not sell any immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is ineligible to be a resolution applicant under section 29A.

Mode of sale

The amendment inserted a proviso to Section 33(1) which provides that the liquidator shall not sell the assets without prior permission of the Adjudicating Authority under this sub-regulation to:

1.  a related party of the corporate debtor subject to proviso to clause (f) of sub-section (1) of Section 35;
2. his related party; or
3. any professional appointed by him.

Assignment of not readily realisable assets

The amendment inserted the words ‘whether crystallised or not’ in the Explanation to the Regulation 37(1).  The explanation, after the insertion of the above said words provides that “not readily realisable asset” means any asset included in the liquidation estate which could not be sold through available options and includes contingent or disputed assets and assets underlying proceedings for preferential, undervalued, extortionate credit and fraudulent transactions referred to in sections 43 to 51 and section 66 of the Code⁵[, whether crystallised or not.

Distribution of unsold accounts

Regulation 38(1), after insertion of the words ‘after approval of the Committee and’, provides that the liquidator may, after approval of the committee andwith the permission of the Adjudicating Authority, distribute amongst the stakeholders, an asset that could not be sold, assigned or transferreddue to its peculiar nature or other special circumstances.

Schedule

Clause 4 after insertion provides that the reserve price shall be the value of the asset arrived at in accordance with regulation 35 and where an auction fails, the reserve price in subsequent auctions may be further reduced, with the approval of the committee,by not more than ten percent at a time.

Clause 11A, after the insertion of new words provides that where the liquidator, with the approval of the committee with voting share of sixty-six per cent.,rejects the highest bid in an auction process, he shall intimate the reasons for such rejection to the highest bidder and mention it in the next progress report.

Clause 13, after the insertion of new words, provides that on payment of the full amount, the sale shall stand completed, the liquidator shall execute certificate of sale or sale deed to transfer such assets with the approval of the committee with voting share of sixty-six per centand the assets shall be delivered to him in the manner specified in the terms of sale.

Conclusion

There is a wide range of amendments in Liquidation process regulations.  All the stakeholders, especially the liquidator, updated their knowledge and be helpful in early process of dissolution of corporate debtors.