Following the suggestion of the Financial Stability and Development Council (FSDC) to ease the compliance burden, the Insolvency and Bankruptcy Board of India (IBBI) has proposed simplifying the forms submitted for the corporate insolvency resolution process (CIRP) by resolution professionals in a discussion paper released. The idea behind the proposed changes is to avoid duplication and streamline the formalities undertaken by resolution professionals.
For instance, IBBI has proposed moving to a monthly compliance reporting framework where insolvency professionals would report the status and progress of the CIRP as on the last day of every month, by filing the applicable forms by the 10th day of the following month.
Certain forms such as the pre-assignment form and CIRP six form, which details interim finance, commencement of insolvency resolution process of guarantors of the company among other things, have been proposed to be eliminated by IBBI. This is being done since relevant details are captured in other forms, the insolvency regulator said.
“Excessive supervision and information requests negatively impact the professionals’ work and incur time and costs. IPs are currently overburdened with compliance requirements, including submitting periodical progress reports to NCLTs while managing the CIRP and liquidation processes,” said Mukesh Chand, senior counsel, Economic Laws Practice.
The revised forms and filing timelines, IBBI said, aim to minimise duplicate submissions, auto-populate fields from existing data to the extent possible, seek information relevant to the stage of CIRP and streamline the compliance process.
“This will help reduce the time and effort required for compliance by insolvency professionals,” IBBI’s discussion paper said.
Experts said that there is a need to shift to automated data and information management systems. “While consolidating and revamping forms is beneficial, the real issue is how this massive data is being utilised to bring about changes and identify the real causes of delays in the CIRP and liquidation processes,” Chand added.
The proposed amendments are expected to make the process less stringent for the insolvency professionals and resolve the complexities.
“The single form approach will effectuate ease of process and help stay focused on the bottom line which is that there must be effective and fruitful corporate resolution,” Jasmine Damkewala, senior partner at Circle of Counsels.
First Published: Jun 11 2024 | 4:55 PM IST
