Strengthening Homebuyer Representation During CIRP

In a pivotal move to enhance the representation of certain classes of creditors which are large in numbers, such as homebuyers, during the corporate insolvency resolution process (CIRP), the Insolvency and Bankruptcy Board of India (IBBI) came out with a notification last week.

Amendments have been made to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), similar to the proposals discussed earlier this year (Click here to read our article on the discussion paper).

According to Regulation 16A, the interim resolution professional selects the insolvency professional, who is the choice of the highest number of financial creditors in the class and makes an application before the Adjudicating Authority for his appointment as the authorised representative.

The addition of a proviso to Sub-regulation (2) of said Regulation stipulates that the selected insolvency professional will act as an interim representative for the class of creditors until the application for the appointment of the authorised representative is under consideration by the Adjudicating Authority. This interim representative will have the authority to attend committee meetings and will possess the same rights and duties as an authorised representative.

This amendment effectively addresses delays in the appointment of the authorised representative, ensuring timely representation of creditors in the Committee of Creditors.