COMPLIANCE CERTIFICATE UNDER CORPORATE INSOLVENCY RESOLUTION PROCESS

[Mr. M. GOVINDARAJAN]

Practising Company Secretary

Introduction

Once the resolution plan is approved by the Committee of Creditors, the resolution professional shall submit the same to the Adjudicating Authority for its approval.  Such submission shall be made at least fifteen days before the maximum period for completion of corporate insolvency resolution process.  The application shall be accompanied with a compliance certificate by the resolution professional in Form H.

Compliance details

The resolution professional, who is appointed by the Adjudicating Authority to look after the insolvency resolution process, is to give the compliance certificate in Form H while submitting the resolution plan approved by the Committee of Creditors (‘CoC’ for short) before the Adjudicating Authority for its approval.  The following are required to be furnished in Form H-

• Details of the resolution professional;
• Details of the Corporate Insolvency Resolution Process;
• Details of the examination of resolution plans by him;
• Certificate as to the compliance of the procedure meant for resolution process;
• Details of the financial creditors in the Committee of Creditors and the distribution of voting share among them;
• Compliance of the provisions of the code and regulations as to the interests of stakeholders;
• Details of the amount provided for the stakeholders under the resolution plan;
• Details of the alteration of the interests of the stakeholders;
• Details of the compliance of the provisions relating to resolution plan;
• Details of time frame adopted in the resolution process;
• Details of the time frame proposed for obtaining relevant approvals;
• Details as to whether any resolution plan is subject to any contingency?
• Details of deviations/non compliance of the Code
• Details of submission of the resolution plan before the Adjudicating Authority;
• Details of section 66 of avoidance application filed/pending.
• Certificate by the resolution professional.

Details of the resolution professional

The following details are to be furnished under this field-

• Name of the resolution professional;
• His Registration number with IBBI;
• Name of the corporate debtor against whom resolution process is initiated.

Details of corporate insolvency resolution process

The following details are to be furnished-

• Name of the corporate debtor;
• Date of initiation of corporate insolvency resolution process (‘CIRP’);
• Date of appointment of interim resolution professional;
• Date of publication of the public announcement;
• Date of constitution of CoC;
• Date of first meeting CoC;
• Date of appointment of resolution professional;
• Date of appointment of registered valuers;
• Date of issue of invitation of Expression of Interest;
• Date of Final List of Eligible Prospective Resolution Applicants;
• Date of Invitation of Resolution Plan;
• Last Date of submission of Resolution Plan;
• Date of approval of Resolution Plan by CoC;
• Date of filing of Resolution Plan with Adjudicating Authority;
• Date of Expiry of 180 days of CIRP;
• Date of order extending the period of CIRP;
• Date of Expiry of Extended Period of CIRP;
• Fair Value;
• Liquidation value;
• Number of Meetings of CoC held.

Examination of resolution plan

The resolution professional is to indicate of his examination of the resolution plans received by him and submission of the same to the CoC and the resolution plan approved by the CoC.

Compliance of the procedure

The resolution professional is to certify as to the details of the compliance as to the resolution plan.  The resolution professional is to certify that-

(i) the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (‘Code’ for short), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘Regulations’ for short) and does not contravene any of the provisions of the law for the time being in force;

(ii) the Resolution Applicant has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order;

(iii) the said Resolution Plan has been approved by the CoC in accordance with the provisions of the Code and the CIRP Regulations made there under. The Resolution Plan has been approved by [number of votes by which Resolution Plan was approved by CoC is to be stated] % of voting share of financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations;

(iv) the voting was held in the meeting of the CoC on held on ______where all the members of the CoC were present or he sought vote of members of the CoC by electronic voting system which was kept open at least for 24 hours as per the regulation 26.

List of financial creditors and distribution of voting among them

In this, the resolution profession is to give the details of the financial creditors of the corporate debtor being the members of the Committee of creditors and distribution of voting among them in the following table-

Sl.No.	Name of creditor	Voting share (in %)	Voting for Resolution Plan (Voted for / Dissented / Abstained)

Compliance of Rule 38(1A)

The resolution professional has to certify that the Resolution Plan includes a statement under regulation 38(1A) of the CIRP Regulations as to how it has dealt with the interests of all stakeholders in compliance with the Code and regulations made there under.

Amount provided for the stakeholders under the resolution plan

The resolution professional is to indicate the details of the amount provided for the stakeholders under the resolution plan in the following table-

(Amount in Rs. lakhs)

Sl.No.	Category of stakeholders	Amount claimed*	Amount admitted	Amount provided under the plan	Amount provided to the amount claimed (%)**
1	Dissenting secured financial creditors
2	Other secured financial creditors
3	Dissenting unsecured financial creditors
4	Others unsecured financial creditors
5	Operational creditors
	Government
	Workmen
	Employees
	…
6	Other debts and dues
	Total

Note-* If there are sub-categories in a category rows are to be added for each sub-category.

**Amount provided over time under the Resolution Plan and includes estimated value of non-cash components. It is not NPV.

Alteration of the interests of the stakeholders

The resolution profession is to indicate the alteration of the interests of existing shareholders by the resolution plan in the following table-

Sl.No.	Category of shareholders	No. of shares held before CIRP	No. of shares held after CIRP	Voting share (%) held before CIRP	Voting share (%) held after CIRP
1
2
3

Compliance of the provisions relating to resolution plan

The resolution professional is to show the compliance of the provisions relating to resolution plan in the CIRP in the following table-

Section of the code/Regulation No.	Requirement with respect to Resolution Plan	Clause of Resolution Plan	Compliance (Yes / No)
25(2)(h)	Whether the Resolution Applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business of the CD?
Section 29A	Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority?
Section 30(1)	Whether the Resolution Applicant has submitted an affidavit stating that it is eligible?
Section 30(2)	Whether the Resolution Plan- (a) provides for the payment of insolvency resolution process costs? (b) provides for the payment of the debts of operational creditors? (c) provides for the management of the affairs of the Corporate debtor? (d) provides for the implementation and supervision of the resolution plan? (e) contravenes any of the provisions of the law for the time being in force?
Section 30(4)	Whether the Resolution Plan (a) is feasible and viable, according to the CoC? (b) has been approved by the CoC with 66% voting share?
Section 31(1)	Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC?
Regulation 35A	Where the resolution professional made a determination if the corporate debtor has been subjected to any transaction of the nature covered under sections 43, 45, 50 or 66, before the one hundred and fifteenth day of the insolvency commencement date, under intimation to the Board?
Regulation 38 (1)	Whether the Resolution Plan identifies specific sources of funds that will be used to pay the – (a) insolvency resolution process costs? (b) liquidation value due to operational creditors? (c) liquidation value due to dissenting financial creditors?
Regulation 38(1A)	Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders?
Regulation 38(2)	Whether the Resolution Plan provides: (a) the term of the plan and its implementation schedule? (b) for the management and control of the business of the corporate debtor during its term? (c) adequate means for supervising its implementation?
Section38(3)	Whether the resolution plan demonstrates that – (a) it addresses the cause of default? (b) it is feasible and viable? (c) it has provisions for its effective implementation? (d) it has provisions for approvals required and the timeline for the same? (e) the resolution applicant has the capability to implement the resolution plan?
Section 39(2)	Whether the RP has filed applications in respect of transactions observed, found or determined by him?

Timeline

The Code prescribes the time to be adopted in each and every stage of the corporate insolvency resolution process.  The resolution professional is to indicate the actual time taken for every step in the process in the following table-

Section of the Code/Regulation No.	Description of Activity	Latest Timeline under regulation 40A	Actual Date
Section 16(1)	Commencement of CIRP and Appointment of IRP	T	T
Regulation 6(1)	Publication of Public Announcement	T+3
Section 15(1)(c) /Regulation 12 (1)	Submission of Claims	T+14
Regulation 13(1)	Verification of Claims	T+21
Section 26(6A) / Regulation 15A	Application for Appointment of Authorised Representative, if necessary	T+23
Regulation 17(1)	Filing of Report Certifying Constitution of CoC	T+23
Section 22(1) and regulation 17(2)	First Meeting of the CoC	T+30
Regulation 35A	Determination of fraudulent and other transactions	T+115
Regulation 27	Appointment of two Registered Valuers	T+47
Regulation 36 (1)	Submission of Information Memorandum to CoC	T+57
Regulation 36A	Invitation of EoI	T+75
	Publication of Form G	T+75
	Provisional List of Resolution Applicants	T+100
Regulation 36B	Issue of Request for Resolution Plan, which includes Evaluation Matrix and Information Memorandum to Resolution Applicants	T+105
Section 30(6)/Regulation 39(4)	Submission of CoC approved Resolution Plan	T+165
Section 31(1)	Approval of Resolution Plan	T=180

Time frame adopted in the resolution process

The resolution professional is to indicate the time frame to adopted in the resolution process in the following table-

Sl.No.	Nature of the appeal	Name of applicable law	Name of the Authority who will grant approval	When to be obtained
1
2
3

Contingency

The resolution professional, in this compliance certificate is to indicate whether the resolution plan is not subject to any contingencies or the Resolution Plan is subject to the following contingencies (Elaborate the contingencies)

i)

ii)

Deviations/non compliance

Following are the deviations / non-compliances of the provisions of the Insolvency and Bankruptcy Code, 2016, regulations made or circulars issued there under (If any deviation/ non-compliances were observed, the details and reasons for the same are to be stated)

Sl.No.	Deviation/Non compliance observed	Section of the Code / Regulation No. / Circular No.	Reasons	Whether rectified or not

Submission of resolution plan

The resolution professional shall indicate that the Resolution Plan is being filed ….. days before the expiry of the period of CIRP provided in section 12 of the Code.

Details of section 66 or avoidance application filed / pending

The resolution professional shall indicate the furnish information in the following table-

Sl.NO.	Type of transactions	Date of Filing with Adjudicating Authority	Date of Order of the Adjudicating Authority	Brief of the Order
1	Preferential transactions under section 43
2	Undervalued transactions under section 45
3	Extortionate credit transactions under section 50
4	Fraudulent transactions under section 66

Certificate

The resolution professional shall give certificate certify that the contents of this certificate are true and correct to the best of my knowledge and belief, and nothing material has been concealed there from.

Conclusion

The procedure of filing Form H has been introduced vide amendment taken place for the IBBI (Insolvency resolution for Corporate Persons) Regulations, 2017, vide IBBI/2018-19/GN/REG031, dated 3rd July, 2018 which came into effect from 04.07.2017.   The task of the resolution professional is increasing by filing Form H but it will give relief to the insolvency professionals since this Form is a method of checking of all formalities that are required to be done in the entire resolution process.