IBBI suggests monitoring panel to oversee resolution plan

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ET BureauLast Updated: Nov 21, 2024, 01:22:00 AM IST

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India's Insolvency and Bankruptcy Board (IBBI) is proposing mandatory monitoring committees to oversee the execution of resolution plans under bankruptcy proceedings. These committees, appointed by creditors, would ensure compliance, manage asset transfers, and report progress to authorities, enhancing transparency and accountability in the resolution process.

IBBI Suggests Monitoring Panel to Oversee Resolution Plan

New Delhi: The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to the Insolvency Resolution Process for Corporate Persons Regulations, 2016 and to make it mandatory to form monitoring committees to oversee implementation of resolution plans under the bankruptcy code.

While the current framework under Regulation 38 of the CIRP Regulations provides certain basic recognition to monitoring committees, the proposed amendments aim to make their constitution mandatory for implementation of all resolution plans, the bankruptcy regulator said in a discussion paper.

The proposed framework will empower the Committee of Creditors (CoC) to take final decisions on the constitution, composition, and functioning period of the monitoring committee, as part of the resolution plan.

"The CoC shall retain the flexibility to decide for the constitution of monitoring committee with lesser period if the resolution plan provides for substantial implementation during such tenure with recorded reasons," it said.

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IBBI proposed that the monitoring committee should comprise members who have a direct stake in the successful implementation of the resolution plan, adding that the committee should be chaired by either the resolution professional who handled the CIRP or another insolvency professional as proposed by the CoC.

The monitoring committee is empowered with comprehensive supervision and monitoring functions, including oversight of plan implementation, ensuring statutory compliance, and facilitating smooth transfer of assets and control to the successful resolution applicant.

"To ensure transparency and accountability, the committee shall submit quarterly progress reports to the Adjudicating Authority and the Board regarding the implementation status," according to the discussion paper.

The bankruptcy regulator said the proposed changes follow observations made by the Supreme Court in a judgement, and are aimed at strengthening the regulatory framework governing monitoring committees under the Code.

The framework also provides flexibility to exclude existing members in case of changes or include additional persons as deemed appropriate by the committee, the discussion paper noted, adding to maintain operational efficiency and accountability, it has been provided that the successful resolution applicant will bear all expenses of the monitoring committee.

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