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Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
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....sonal guarantors to corporate debtors. 2. Definitions. In these regulations, unless the context otherwise requires, - (a) "associate" in relation to a creditor, a bankruptcy trustee or professionals appointed by the bankruptcy trustee shall have the same meaning as assigned to it in relation to a debtor in sub-section (2) of section 79, as may be applicable; (b) "bankruptcy process costs" shall mean - (i) the fees payable to the bankruptcy trustee; (ii) payments and expenses referred to in sub-regulation (1) of regulation 5, sub-regulation (4) of regulation 6, sub-clause (ii) of clause (c) and clause (f) of sub-regulation (3) of regulation 10, sub-regulation (3) of regulation 28, and sub-regulation (3) of regulation 31; (iii) such other costs and expenses directly relatable to the bankruptcy process, to the extent approved or ratified by the committee; (c) "Code" means the Insolvency and Bankruptcy Code, 2016 (31 of 2016); (d) "committee" means the committee of creditors as defined in sub-section (11) of section 79; (e) "corporate debtor" means a corporate person for whom the guarantor has given a personal guarantee; (f) "electronic means" means an authorised and sec....
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....uring the preceding three years, shall make a disclosure of remuneration received, year-wise for such audit, to the committee. (3) An insolvency professional, other than who has filed an application under section 122 or 123 on behalf of a guarantor or a creditor, as the case may be, shall provide a written consent in Form A to the Adjudicating Authority before his appointment as bankruptcy trustee in a bankruptcy process. 4. Fees of bankruptcy trustee. (1) The bankruptcy trustee shall be entitled to such fee and the fee shall be paid in such manner as decided by the committee. (2) In all cases other than those covered under sub-regulation (1), the bankruptcy trustee shall be entitled to a fee as a percentage of the amount realised from the estate of the bankrupt and of the amount distributed from such realisation, in accordance with Schedule I. 5. Appointment of professionals. (1) A bankruptcy trustee may appoint accountants, registered valuers, advocates or other professionals, as may be necessary, to assist him in the discharge of his duties, obligations and functions for a reasonable remuneration and such remuneration shall form part of the bankruptcy process cost: Provid....
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....rovided that if the bankruptcy trustee has reasons to believe, to be recorded in writing, that the books of the bankrupt are not reliable, he shall also provide such estimates based on reliable records and data otherwise available to him. (b) the proposed plan of action in relation to administration of the estate, including the timeline in which it is proposed to be carried out and the estimated costs; (c) any further inquiry to be made in respect of the assets, business or affairs of the bankrupt; (d) details of the assets which are intended to be realised, including the following- (i) value of the assets, valued in accordance with regulation 33; (ii) intended manner of realisation of the assets and reasons thereof; (iii) expected amount of realisation; (iv) any other information that may be relevant for the realisation of the assets. (e) details of the excluded assets and other assets under sub-section (2) of section 155. (4) The preliminary report shall be confidential during the bankruptcy process, unless the Adjudicating Authority permits any person to access it subject to such terms and conditions, as it may consider appropriate. 9. Early completion of administr....
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....es carried out by them; (f) other expenses incurred by the bankruptcy trustee in relation to the bankruptcy process; (g) status of any material litigation by or against the bankrupt; (h) filing of and developments in relation to disclaimer of onerous properties or leasehold interests under sections 160 and 162, or transactions under sections 164, 165 and 167. (i) accounts maintained by the bankruptcy trustee showing the receipts and payments made during the period of the report, as well as cumulative receipts and payments made since the bankruptcy commencement date; and (j) any other relevant aspect of the bankruptcy process. (4) The progress report for the fourth quarter of the financial year shall enclose audited accounts of the receipts and payments of the bankrupt for the financial year. (5) The progress reports shall be confidential during the bankruptcy process, unless the Adjudicating Authority permits any person to access it on specified terms and conditions. Illustration Where an insolvency professional becomes a bankruptcy trustee on 13th February, 2020 and ceases to act as such on 12th February, 2021, he shall submit progress reports as under: Report No. Peri....
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....he Adjudicating Authority for appropriate directions as may be necessary for the conduct of the bankruptcy process. 13. Preservation of records. The bankruptcy trustee shall preserve a physical or electronic copy of the registers, books, reports, minutes of meetings and other records relating to bankruptcy process, including administration of estate of the bankrupt as per the record retention schedule as may be communicated by the Board in consultation with insolvency professional agencies. CHAPTER III CLAIMS 14. Future claims. (1) A person, who is entitled to distribution in the same manner as any other creditor, may submit a claim, which is not due and payable on the bankruptcy commencement date, to the bankruptcy trustee. (2) Subject to any contract to the contrary, the person under sub-regulation (1) shall be entitled to the principal amount and the interest that has accrued till the bankruptcy commencement date. 15. Negotiable instruments. Where a person seeks to prove a claim in respect of a bill of exchange, promissory note or other negotiable instrument or security of a like nature for which the bankrupt is liable, a certified true copy of the same shall accompany ....
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....en in any meeting of the committee prior to such modification. (6) The list of creditors, as modified from time to time and filed with the Adjudicating Authority, shall be - (a) available for inspection by the persons who submitted claims with proof; (b) available for inspection by partners and guarantors of the bankrupt; (c) displayed on the website, if any, of the bankrupt. CHAPTER IV MEETINGS OF COMMITTEE AND VOTING 21. Notice for meeting. (1) A bankruptcy trustee may convene a meeting of the committee as and when he considers necessary and shall convene a meeting on a request by creditors having not less than thirty three percent of voting share. (2) The notice under this regulation and for the meeting under section 133 shall be served on every participant at the address provided to the bankruptcy trustee. (3) A meeting of the committee shall be convened by giving a notice of seven days or such other notice as decided by the committee, provided that such notice shall not be less than forty-eight hours. (4) The notice convening the meeting of creditors shall inform the participants of the venue, the time, the date of the meeting and of the options available to - (....
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....rticipants of the names of all persons who are present for the meeting and confirm if the required quorum is complete. (4) The bankruptcy trustee shall ensure that the required quorum is present throughout the meeting. (5) From the commencement of the meeting till its conclusion, no person, other than the participants and any other person whose presence is required by the bankruptcy trustee, shall be allowed access to the meeting, without the permission of the bankruptcy trustee. (6) The bankruptcy trustee shall ensure that minutes are made in relation to each meeting of the creditors and are circulated to all participants by electronic means within forty-eight hours of the said meeting. 24. Voting share. (1) Subject to section 135, the voting share of each creditor shall be in proportion to the debt owed to such creditor. (2) The voting share of a secured creditor shall be in proportion to unsecured part of the debt, if any, if it has opted to enforce its security interest. (3) The voting share of a secured creditor who has opted to relinquish its security interest shall be in proportion to the amount of debt relinquished. 25. Voting by the committee. (1) The bankruptcy t....
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....n the reserve price of a failed auction. (3) The following persons shall not purchase or acquire any interest in the property of bankrupt, directly or indirectly, without permission of the Adjudicating Authority- (a) the bankruptcy trustee or any partner or director of the insolvency professional entity of which the bankruptcy trustee is a partner or director; (b) any professional appointed by the bankruptcy trustee for the bankruptcy process; (c) any creditor or associate of the bankrupt; and (d) any company where the bankrupt or a creditor is a promoter or director. (4) The bankruptcy trustee shall not proceed with a sale, if he has reason to believe that there is any collusion amongst any one or more of the following persons: - (a) the buyers; (b) the bankrupt; (c) the creditors; (d) associates of the bankrupt or creditors; (e) the corporate debtor; or (f) related party of the corporate debtor, and shall submit a report to the Adjudicating Authority for appropriate orders. 28. Acquisition, etc., of after acquired property by bankrupt. (1) After a notice is given by the bankrupt under sub-section (2) of section 150, he shall not part with any increase in ....
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....istered valuer appointed under sub-regulation (1) shall submit to the bankruptcy trustee the estimates of the realisable value of the asset computed in accordance with internationally accepted valuation standards, after physical verification of the assets of the bankrupt. (3) The bankruptcy trustee may appoint an additional registered valuer, for valuing the assets of the bankrupt if required in the circumstances of the case, who shall independently submit his estimate as per sub-regulation (2). (4) In the event an additional registered valuer is appointed under sub-regulation (3), the average of the estimates received from both valuers will be considered to be the value of the assets. 31. Realisation of security interest. (1) A secured creditor, who seeks to realise his security, shall intimate the bankruptcy trustee of the price at which he proposes to realise the secured asset. (2) The bankruptcy trustee shall attempt to identify a buyer willing to purchase the security at a price higher than the price intimated under sub-regulation (1), and the asset shall then be sold to such buyer, if any, at the higher price by the secured creditor. (3) Where the secured asset is reali....
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.... unless a preliminary report is filed with the Adjudicating Authority. (2) The bankruptcy process cost shall be deducted before any dividend is distributed under this regulation. 35. Return of amount. A creditor shall forthwith return any amount received by him in distribution, which he was not entitled to at the time of distribution, or subsequently. 36. Unclaimed proceeds of bankruptcy or undistributed assets. (1) After filing the final report under regulation 11, the bankruptcy trustee shall, within three days from the date of such filing, apply to the Adjudicating Authority for an order to credit to the Insolvency and Bankruptcy Fund formed under the Code, any unclaimed dividends of bankruptcy process or undistributed asset or any other balance amount payable to the creditors, left with him. (2) Without prejudice to any penalty that may be imposed by the Board, the bankruptcy trustee shall be liable to pay interest at the rate of twelve percent per annum on the amount retained by him under sub-regulation (1), if he fails to- (a) apply to the Adjudicating Authority within three days from the date of filing; (b) credit to the Fund within three days from the date of orde....
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....Debtors) Regulations, 2019, I hereby give consent to the proposed appointment. 3. I declare and affirm as under: - (a) I am registered with the Board as an insolvency professional. (b) I am not subject to any disciplinary proceedings initiated by the Board or the Insolvency Professional Agency. (c) I do not suffer from any disability to act as a bankruptcy trustee. (d) I am eligible to be appointed as bankruptcy trustee of the bankrupt under regulation 3 of the Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 and other applicable provisions of the Code and regulations. (e) I shall make the disclosures in accordance with the code of conduct for insolvency professionals as set out in the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016; (f) I have the following processes in hand: Sl. No. Role as No. of processes on the date of consent 1 Interim Resolution professional 2 Resolution Professional of: a. Corporate debtors b. Personal guarantors or individuals or partnership firms 3 Liquidator of: a. Liquidation Process b. Voluntary Liquidation Pr....
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.....25 On further sums distributed 0.13 0.10 0.06 0.05 SCHEDULE II Mode of sale [Under regulation 27] PART A. AUCTION (1) Where an asset is to be sold through auction, the bankruptcy trustee shall do so in the manner specified herein. (2) The bankruptcy trustee shall prepare a sale strategy in writing for the sale of the asset and may take help of marketing professionals if it is required, which shall be submitted to the Adjudicating Authority along with the progress report under regulation 10. (3) The marketing strategy may include- (a) releasing advertisements for auction of the asset; (b) preparing information sheets for the asset; (c) preparing a notice of sale; and (d) liaising with agents. (4) The bankruptcy trustee shall prepare terms and conditions of sale, including reserve price, earnest money deposit, pre-bid qualification, and time period for full payment. (5) The reserve price shall be the value of the asset arrived at in accordance with regulation 30 and such valuation shall not be more than six months old: Provided that in the event an auction fails at such price, the bankruptcy trustee may, in consultation with the committee, reduce such reserve....