TMI BlogInsolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) They shall come into force from the 1st day of December, 2019. (3) These regulations shall apply to the bankruptcy process for personal 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed independent of the guarantor, if he- (a) is not an associate of the guarantor; (b) is not a related party of the corporate debtor; and (c) has not acted or is not acting as interim resolution professional, resolution professional or liquidator in respect of the corporate debtor. (2) A bankruptcy trustee, who has been an auditor of the guarantor at any time during 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report; (b) progress reports; and (c) a final report. 8. Preliminary report. (1) The bankruptcy trustee shall submit a preliminary report to the Adjudicating Authority and the committee within ninety days of the bankruptcy commencement date. (2) The bankruptcy trustee shall send a copy of the preliminary report to the bankrupt at the time of submission of the report. (3) The preliminary report shall include the following details- (a) a list of the assets and liabilities of the bankrupt as on the bankruptcy commencement date based on the books of the bankrupt: Provided 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty made to the creditors; (vi) details of any property that remains to be realised; (vii) list of creditors; and (viii) any other relevant information. (c) an asset sale report with the following details of the assets realised (i) realised value; (ii) cost of realisation; (iii) manner and mode of realisation, including details as per Schedule II; (iv) reasons for any reduction in the realisable value compared to the value mentioned in the preliminary report; and (v) details of the persons in favour of whom the property has been realised. (d) details of fee and remuneration due to and received by the bankruptcy trustee along with a description of the activities carried out by him; (e) details of the fee and remuneration paid to professionals appointed by the bankruptcy trustee along with a description of activities 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 onerou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 st April, 2019 - 12 th February, 2021 27th February, 2021 11. Final report. (1) The final report shall contain an account of the completion of the administration and distribution of the estate of the bankrupt, including (a) manner of realisation of the assets of the bankrupt; (b) manner of distribution of the dividends amongst the creditors; (c) details regarding the discharge of the bankrupt; (d) unclaimed dividend, if any; (e) surplus dividend, if any; and (f) if the bankruptcy process cost exceeds the estimated cost provided in the preliminary report, along with reasons for the same. (2) The bankruptcy trustee shall file the final report with the Adjudicating Authority along with the application under sub-section (1) of section 138. 12. Persons to extend cooperation. (1) The following persons shall extend all assistance and cooperation to the bankruptcy trustee to complete the bankruptcy process- (a) the bankrupt; (b) creditors of the bankrupt; (c) employees and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unpaid up to the bankruptcy commencement date. 17. Determination of quantum of claim. Where the amount claimed by a claimant is not precise due to any reason, the bankruptcy trustee shall make the best estimate of the amount of the claim based on the information available with him. 18. Debt in foreign currency. The claims denominated in foreign currency shall be valued in Indian currency at the official exchange rate as on the bankruptcy commencement date. Explanation . For the purposes of this regulation, official exchange rate means the reference rate published by the Reserve Bank of India or derived from such reference rate. 19. Transfer of debt due to creditors. (1) Where a creditor assigns or transfers the debt to any person during the bankruptcy process period, both parties shall provide the bankruptcy trustee the terms of such assignment or transfer, and the identity and details of the assignee or transferee. (2) The bankruptcy trustee shall notify each creditor and the Adjudicating Authority of any resultant change in the committee within two days of such change. 20. Committee of cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the venue, the time, the date of the meeting and of the options available to - (i) participants to attend the meeting either in person, through video conferencing, or through a proxy; and (ii) creditors to cast vote in person, through a proxy, by electronic means or by electronic proxy, as the case may be. (5) The notice of the meeting shall carry the agenda, which shall include the following- (a) list of matters to be discussed; (b) list of issues to be voted upon; (c) relevant documents in relation to the matters to be discussed and issues to be voted upon. (6) If an option to attend the meeting through video conferencing is made available to the participants, the notice of the meeting shall - (a) state the process and the manner for attending the meeting; (b) provide the login ID and the details of a facility for generating password for access to the meeting in a secure manner; and (c) provide contact details of the person who shall address the queries connected with the video conferencing. (7) If an option to cast vote by electronic means is made available to the creditors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are 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 trustee shall take a vote of the creditors present in the meeting on any item listed for voting, after discussion on the same. (2) At the conclusion of the meeting, the bankruptcy trustee shall prepare minutes of the meeting, including the names of creditors, who voted for, against or abstained from voting on the items put to vote in the meeting. (3) The bankruptcy trustee shall- (a) circulate the minutes of the meeting by electronic means to all participants of the meeting within forty-eight hours of the conclusion of the meeting, and (b) seek a vote on the items listed for voting in the meeting from the creditors who were not present in the meeting or did not vote at the meeting, by electronic means, where the voting shall be kept open for at least twenty-four hours from the circulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 his income or dispose of any property acquired, without the prior permission of the Adjudicating Authority. (2) If the bankrupt disposes of property before giving the notice under sub-section (2) of section 150, he shall within seven days from such disposal, disclose to the bankruptcy trustee the relevant details of the person to whom the property has been transferred, and shall also provide any other information which may be necessary to enable the bankruptcy trustee to trace the property and recover it for the purpose of bankruptcy estate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 realised under sub-regulation (2), the cost of identification of the buyer shall form part of bankruptcy process cost. (4) If the bankruptcy trustee does not identify a buyer under sub-regulation (2), or the person so identified does not buy the secured asset, the secured creditor may realise the secured asset in the manner it deems fit, but at least at the price intimated under sub-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 order of the Adjudicating Authority. (3) The bankruptcy trustee shall, when crediting the amount referred to in sub-regulation (1), furnish to the Board, a statement setting forth the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Corporate 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 Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aadhaar Number PAN CIN GSTIN E-mail Signature or failing him; 2. Full name Address Present Permanent Business Identification Number Aadhaar Number PAN CIN GSTIN E-mail Signature as my pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Percentage of fee on the amount distributed On the first 50 lakh 5.00 3.75 3.00 1.88 On the next 75 lakh 3.75 3.00 1.88 1.41 On the next 1 crore 2.50 1.88 1.25 0.94 On the next 9 crore 1.88 1.40 0.94 0.71 On the next 40 crore 1.25 0.94 0.63 0.47 On the next 50 crore 0.63 0.48 0.34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assets and is in the best interest of the creditors. (9) The bankruptcy trustee may engage the services of qualified professional auctioneers specialising in auctioning the assets, provided that such auctioneer fulfils the requirements in regulation 5. (10) The auction shall be transparent, and the highest bid at any given point shall be visible to the other bidders unless the bankruptcy trustee has received permission from the Adjudicating Authority allowing otherwise regarding the visibility of the bid price. (11) If required, the bankruptcy trustee may conduct multiple rounds of auctions with a view to maximise the realisation from the sale of assets, and to promote the best interests of the creditors. (12) On the close of the auction, the payment schedule shall be communicated to the highest bidder. On payment of the full amount, the bankruptcy trustee shall execute the sale and the asset will be transferred in the manner specified in the terms of the sale. PART B. PRIVATE SALE (1) Where an asset is to be sold through private sale, the bankruptcy trustee shall conduct the sale in the manner specified herein. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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