Introduction
The Insolvency and Bankruptcy Board of India (‘IBBI’) has enacted significant amendments through the IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024[i], (‘2024 Regulations’). These amendments effective from 31.01.2024, amend the existing IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019[ii] (‘2019 Regulations’), marking a significant evolution in the regulatory framework governing insolvency matters.
The Eligibility Criteria of Bankruptcy Trustees Relaxed
One notable change under the 2024 Regulations is the relaxation of eligibility criteria for appointing insolvency professionals (‘IPs’) as bankruptcy trustees (‘BTs’) in bankruptcy proceedings. Previously, IPs who had served or were serving as interim resolution professionals (‘IRPs’), resolution professionals (‘RPs’), or liquidators for a corporate debtor (‘CD’) were restricted from being appointed as BTs in cases involving personal guarantors (‘PGs’) to the same CD. The removal of this restriction vide the 2024 Regulations facilitates the appointment of IPs across different capacities, enhancing procedural efficiency and coordination in insolvency and bankruptcy proceedings involving PGs.
Relaxation of Professional Appointment Criteria
The 2024 Regulations omit reg. 5(1)(c) thereby broadening the scope for IPs to be appointed as professionals by the BT. This change aligns to streamline the insolvency process, allowing for greater flexibility in the appointment of professionals who have a prior engagement with the CD, thereby potentially improving the efficiency and effectiveness of bankruptcy proceedings involving PGs.
Conclusion
The 2024 Regulations aim to foster a more cohesive and efficient framework for managing insolvency and bankruptcy cases of PGs to CDs. By relaxing the eligibility criteria for the appointment of IPs and professionals in bankruptcy proceedings, the amendments enhance the alignment and coordination between corporate insolvency processes and PG bankruptcy cases. These regulatory modifications are poised to have a significant impact on the insolvency landscape, promising improved procedural efficiency and potentially leading to quicker resolutions in cases involving PGs.
End Notes:
[i] Notification no. IBBI/2023-24/GN/REG108 dated 31.01.2024.
[ii] Notification No. IBBI/2019-20/GN/REG051 dated 20.11.2019.
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Authored by Aditya Gupta, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.