Insolvency and Bankruptcy Board amends liquidation process regulations

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The Insolvency and Bankruptcy Board of India (IBBI) on August 6 amended regulations for liquidation process, providing more clarity on fee payable to liquidators. IBBI is a key institution in implementing the Insolvency and Bankruptcy Code (IBC), which provides for market-linked and time-bound resolution of stressed assets. In case the insolvency resolution process does not succeed, then the company concerned goes for liquidation.

The regulations require the Committee of Creditors (CoC) to fix the fee payable to the liquidator. Where the fee has not been fixed by the CoC, the regulations provide for a fee as a percentage of the amount realised and of the amount distributed by the liquidator.

An official release on Thursday said there have been instances where a liquidator realises the amount while another liquidator distributes the same to stakeholders.

"The amendment made to the regulations today clarifies that where a liquidator realises any amount, but does not distribute the same, he shall be entitled to a fee corresponding to the amount realised by him.

"Likewise, where a liquidator distributes any amount, which is not realised by him, he shall be entitled to a fee corresponding to the amount distributed by him," the release said.