 Multiple laws – multiple fora

Genesis of  Lack of holistic remedy

the Code  Insolvency resolution framework for Individuals
stagnant for over 100 years!
 The 1861 Indian High Courts Act led to the setting
up of the High Court system in place of the
Presidency towns Supreme Courts, which also has
jurisdiction over insolvency
 The Presidency Towns Insolvency Act, 1909,
 The Provincial Insolvency Act, 1920,
 Framework for resolution of Corporate bankruptcy
 Companies Act, 1956
 The Micro, Small and Medium Enterprise
Development Act, 2006,
 The SARFAESI Act, 2002
 The RDDBFI Act, 1993
 SICA-1985 (BIFR)
 Informal framework (prominently based on RBI
Guidelines)
 Corporate Debt Restructuring
 Joint Lenders Forum
 Strategic Debt Restructuring
 S4A Sustainable Structuring of Stressed Assets
 Demographics
NCLT admitted cases by
Applicant-CIRP- ongoing IPs Registered with IPAs
IIIICAI (ICAI)- 1072

Total- 678 ICAIIPA (ICSI)- 1080

ICAIIPA (ICAI-CMA)- 149

IPE- 76
FC CD &
OC
Others
177 235 NCLT admitted 192 voluntary liquidation cases
266

NCLT admitted 97 voluntary liquidation cases

Technical understanding Responsibility as IRP
requirement to act as IPs  Act as CEO & MD of the corporate to
maintain gong concern status and
momentum.
 Need to arrange interim Finance, if
required..
 Collect all information relating to the
assets, finances and operations of
the corporate debtor for past 2
years.
 Assess & segregate the Liability of
Financial & Operational Creditors
 Identify Related Party, Undervalue,
Erroneous, Preferred transactions,
 Prepare information memorandum
Responsibility as RP
 Act as CEO & MD of the corporate to
maintain gong concern status and
momentum.
 Need to arrange interim Finance, if
required..
 Take concurrence from COC on all
matters.
 Identify Related Party, Undervalue,
Erroneous, Preferred transactions,
 Push for Resolution Plan within 120
days from takeover
 Successfully steer the Resolution
plan according to Code guideline.
 Select the appropriate Resolution
plan after following the procedures
set in Ordnance of IBC code.
 Establish Related party transaction Operational Challenges
Major Challenges After a FDD for last 2 years
 Managing changed management situation
within the corporate
Transactions influenced by KMP
Related Party

 Managing inter relationship within external

Transactions between Subsidiaries stake holders
Transactions between JVs
 Managing Information flows with complete
Transactions between Associates security and integrity

Refer IAS-24, IAS-28, IFRS-3, 10, 11, 12  Managing Going Concern Momentums
IndAS- 24, 28, 113, 110, 111, 112
 Get the best out of Resolution Package
Assets Valuation- the latest debate,
but new hassle for IP  Not only ends only dealing with Legal issues
but a lots besides.
Infrastructure & Talent pool

Cross Country Insolvency

 Issues in Resolution Plan
Major Challenges- Resolution
Prepare most accurate Information
Memorandum of information
Prepare evaluation matrix for
submitted resolution proposal
Establish the credentials of
resolution applicants- Section 29A
Evaluating resolution plan in view to
understand complete stakeholder
satisfaction.
Convince COC on best plan
Convince AA for the best resolution
plant and execution modalities.
Operational Challenges
 Cost implication for engaging best professions
(valuers, market intelligence, predictive
analytics) are high. Get resistance from COC.
 Developing a
 Managing Information flows with complete
security and integrity
 Managing Going Concern Momentums
 Get the best out of Resolution Package
 Not only ends only dealing with Legal issues
but a lots besides.
 Comparative Strength Glaring weakness Opportunities
Opportunities for CMAs
 Strong process understanding  Weak networking and lack in  Indian banking sector
or incline for process Team effort. has second highest
understanding. This NPA 17.78% of GDP
professional attributes will  Poor Visibility and lack of after Italy with 27.22.
help to be a successful prime institute support.
resolution professional  Japan has no NPA,
 Regular updating of skill sets. USA 2.12%, UK 1.78%
 Industry working experience Brazil-11.18%
will help to stand in
challenges like Change  After increasing in the
management, Man & rank of ease of doing
Situational management. business, FIIs are
interested for setting
 Analytical skills of CMAs will AMF for stressed
help to identify “what went assets.
wrong”  CMAs can convert
this opportunities with
strength after working
on the weakness.
 Operational Debts
 a claim in respect of the provision
of goods or
 services including employment or
a debt in respect of the
repayment of dues arising under
any law for the time being in force
and payable to the Central
Government, any State
Government or any local authority
Default
 non-payment of debt when
whole or any part or instalment of
the amount of debt has become
due and payable and is not
repaid by the debtor or
 the corporate debtor, as the
case may be;
Minimum Default
Rupees. 1,00,000 Only
Case Matters for reference
The NCLAT in Pslogix Infrastructure Pvt. Ltd. v. lClCl Bank Ltd has
held that a general power of attorney holder is not authorised to
present an insolvency application under sections 7, 9 and 10 of
the Insolvency and Bankruptcy Code, 2016 ("IBC")
International Road Dynamics South Asia Pvt. Ltd. Vs. Reliance
Infrastructure Ltd. Interpreting section 9 of the Code, the Hon’ble
NCLAT held: “We are of the view that different claim(s) arising out
of different agreements or work order, having different amount
and different dates of default, cannot be clubbed together for
alleged default of debt, the cause of action is being separate. For
the said reasons, we hold that the joint application preferred by
appellant under Section 9 is defective, as distinct from
incomplete, and, was not maintainable.”
Mobilox Innovations Private Limited Vs. Kirusa Software Private
Limited-SC- The Hon’ble Supreme Court has settled several issues
in this matter. As regards ‘existence of a dispute’ under section
8(2)(a) of the Code, it clarified that what is material is that a
dispute must exist in fact. It should not be spurious, hypothetical
or illusory and it should not be a patently feeble legal argument
or an assertion of fact unsupported by evidence.
 Financial Debts
 money borrowed against the payment of
interest;
 any amount raised by acceptance under
any acceptance credit facility
 any amount raised pursuant to any note
purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar
instrument;
 the amount of any liability in respect of any
lease or hire purchase contract which is
deemed as a finance or capital lease under
the Indian Accounting Standards
 receivables sold or discounted other than
any receivables sold on nonrecourse basis;
 any amount raised under any other
transaction, including any forward sale or
purchase agreement, having the
commercial effect of a borrowing;
 any derivative transaction
 any counter-indemnity obligation in respect
of a guarantee, indemnity, bond,
documentary letter of credit or any other
instrument issued by a bank or financial
institution;
Case Matters for reference
Innoventive Industries Limited vs. ICICI Bank Limited-SC
Industrial & Commercial Bank of China vs Alok Industries
Financial debt is money borrowed to repay on a future
date along with interest. The money is lent for value
addition to the money as agreed between parties.
Bills of exchange along with interest would become
“financial debt” not “operational debt.”
Nikhil Mehta and Sons vs AMR Infrastructure Limited
Committed return plan in a real estate transaction should
be considered as financial debt and the applicant should
be considered as FC.
M/s Uttam Galva Steel Limited
Financial debt is money borrowed to repay on a future
date along with interest. The money is lent for value
addition to the money as agreed between parties.
Bills of exchange along withinterest would become
“financial debt” not “operational debt.”
 "resolution plan" means a plan proposed by any person for insolvency
Resolution resolution of the corporate debtor as a going concern in accordance

Plan "resolution applicant" means any person who submits a resolution plan
to the resolution professional;

"resolution professional", for the purposes of this Part, means an insolvency professional
appointed to conduct the corporate insolvency resolution process and includes an interim
resolution professional;

"resolution process cost",

1. amounts due to suppliers of essential goods and services under Regulation 32;
2. amounts due to a person whose rights are prejudicially affected on account of the moratorium
imposed under section 14(1)(d);
3. expenses incurred on or by the interim resolution professional to the extent ratified under Regulation
33;
4. expenses incurred on or by the resolution professional fixed under Regulation 34; and
5. other costs directly relating to the corporate insolvency resolution process and approved by the
committee.
A resolution plan may provide for the measures required for implementing it, including but not limited to the
following- 37 of the Regulation.

(a) transfer of all or part of the assets of the corporate debtor to one or more persons;

(b) sale of all or part of the assets whether subject to any security interest or not;

(c) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate
debtor with one or more persons;

(d) satisfaction or modification of any security interest;

(e) curing or waiving of any breach of the terms of any debt due from the corporate debtor;

(f) reduction in the amount payable to the creditors;

(g) extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor;

(h) amendment of the constitutional documents of the corporate debtor;

(i) issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests,
or other appropriate purpose; and

(j) obtaining necessary approvals from the Central and State Governments and other authorities.
Mandatory contents of the resolution plan.- Regulation 38
(1) A resolution plan shall identify specific sources of funds that will be used to pay the -

(a) insolvency resolution process costs and provide that the insolvency resolution process costs will be paid in
priority to any other creditor;

(b) liquidation value due to operational creditors and provide for such payment in priority to any financial creditor
which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the
Adjudicating Authority; and

(c) liquidation value due to dissenting financial creditors and provide that such payment is made before any
recoveries are made by the financial creditors who voted in favour of the resolution plan.

A resolution plan shall provide:

(a) the term of the plan and its implementation schedule;

(b) the management and control of the business of the corporate debtor during its term; and

(c) adequate means for supervising its implementation.

A resolution plan shall contain details of the resolution applicant and other connected persons
‘details’ shall include the following in respect of the resolution applicant and other connected person, namely:-
(a) identity;
(b) conviction for any offence , if any, during the preceding five years;
(c) criminal proceedings pending, if any;
(d) disqualification, if any, under Companies Act, 2013, to act as a director;
(e) identification as a wilful defaulter, if any, by any bank or financial institution or consortium thereof in
accordance with the guidelines of the Reserve Bank of India;
(f) debarment, if any, from accessing to, or trading in, securities markets under any order or directions of the
Securities and Exchange Board of India,; and
(g) transactions, if any, with the corporate debtor in the preceding two years.”;
(ii) the expression ‘connected persons’ means-
(a) persons who are promoters or in the management or control of the resolution applicant;
(b) persons who will be promoters or in management or control of the business the corporate debtor during the
implementation of the resolution plan;
(c) holding company, subsidiary company, associate company and related party of the persons referred to in
items (a) and (b)
The resolution professional shall submit to the committee all resolution plans which comply with the requirements of
the Code and regulations made thereunder along with the details of following
(a) preferential transactions under section 43;
(b) undervalued transactions under section 45;
(c) extortionate credit transactions under section 50; and
(d) fraudulent transactions under section 66, and the orders, if any, of the adjudicating authority in respect of such
transactions.”.
IBC guides for winding up, liquidation and dissolution
Section 2(94A) of the Companies Act 2013 defines “winding up”- introduced by section 255 schedule
XI of the IBC 2016, briefly

Corporate IBC-2016 Companies Act-2013

Winding up (NCLT) (HC Jurisdiction)
Process

Corporate Insolvency Winding up on

Resolution Process- grounds other than
(Inability to pay debts) inability to pay
Under IBC Companies Act 2016

Pending cases in
Voluntary Liquidation HC filed before IBC
regime
Quick idea of global insolvency regimes
Global insolvency regimes may be Enacted in countries
classed into
 Pro-debtor jurisdictions USA, France,

UK, and other commonwealth countries

 Pro-creditor jurisdictions
Islamic countries, and until recently, China passed a
 Indifferent, or unclear law in 2006

Indicators of a pro creditor stance of a jurisdiction- identical to Indian Scenario

• The scope and efficiency, in bankruptcy, of security and title financing (such as retention of
title, factoring and financial leasing);
• Insolvency set-off;
• Corporate rehabilitation statutes;
• Ownership of assets in the possession of the debtor (trust, tracing);
• Preferential transfers;
• Contract and lease rescission.
Based on Philip Wood’s write up
Why …..CODE….. not an…… ACT ??
A "Code", as per Black’s law Codes of India
dictionary is, The Indian Penal Code 1860
“A Collection or Compendium
The Code of Civil Procedure 1908
of Laws”
The Code of Criminal Procedure 1860
Systematic and comprehensive
The insolvency and Bankruptcy Code 2016
compilation of laws, rules and
regulations that are consolidated
and classified for a particular Companies (excluding BSFI)
subject.
LLP

Partnership & Individual

Other body incorporated

The IBC Codes Applies to……

Journey Committees on bankruptcy reforms in India
26th Report of Law Commission on Insolvency Laws,
towards the 1964 recommended consolidation of extant two personal
Code insolvency laws into one.

1981  Tiwari Committee, led to enactment of SICA, became an Act in 1985

1991  Narasimha Committee-1, led to enactment of the RDDBFI Act, 1993

1998  Narasimha Committee 2, led to enactment of the SARFAESI Act, 2002

Justice Eradi Committee. Recommended amendment in Companies (Amendment) Act,
1999 2002, proposed setting up of NCLT for rehabilitation of sick companies –but never
enforced
2001 L. N. Mitra Committee, First proposed a Comprehensive bankruptcy code

2005 Irani Committee, made aamendments to RDDBFI and SARFAESI

Financial Sector Legislative Reforms Commission, prepared a draft on Indian Financial
2013
Code includes a for resolving distressed financial firms.
The Bankruptcy Law Reform Committee (BLRC) under the Chairmanship of Mr. T.K.
2014 Viswanathan, led to The Insolvency and Bankruptcy Bill, 2015, received the assent of the
President on 28th May 2016
 The IBC-2016 Applies for……...
 Insolvency
 Liquidation
 Voluntary Liquidation
 Bankruptcy
 Fresh Start process
General Understanding.docx
The IBC does not apply to…….
Part II of the code pertaining to insolvency to
Individuals & Firms – does not apply to State
Jammu & Kashmir
Part II of the code pertaining to insolvency
code – does not apply to Financial Service
providers
For MFIs, NBFCs and financial service providers
the Ministry of Finance has released draft of
“The Financial Resolution and Deposit
Insurance Bill, 2016”.Cabinet approves
proposal to introduce the Financial Resolution
and Deposit Insurance Bill 2017- ref- Press
Information Bureau Government of India -
The Financial Resolution and Deposit Insurance Bill.docx
Acts repealed by the Code
 Presidency Towns Insolvency Act, 1909

 Provincial Insolvency Act, 1920

Impact of the IBC 2016

 BIFR and SICA go off completely

 Corporate resolutions comes under NCLT

 Timelines under the new law – entire process of resolution to be over in 180
to max 270days

 Debtors under banker-driven restructuring also go for NCLT/DRT

resolution –In view of mandatory timelines, the case may reach bankruptcy
Impact of the IBC 2016
 Companies and guarantors can be both brought under a common forum –
NCLT/DRT

 While borrowers may file resolution applications seeking moratorium, but

borrower will have to face the threat of liquidation/bankruptcy ;

 Accelerating provisioning – faster transition into a case of loss assets.

 Brings greater financial discipline

 Creditors have an upper hand in resolution plans

 If revival does not work out, entity to mandatorily go into liquidation

The Finance Bill, 2017
Made the amendments , in turn, provide for amendments to infavour of the Code

 The Indian Partnership Act, 1932

 The Central Excise Act, 1944

 The Income-tax Act, 1961

 The Customs Act, 1962

 The Recovery of Debts due to Banks and Financial Institutions Act, 1993

 The Finance Act, 1994

 The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

 The Sick Industrial Companies (Special Provisions) Repeal Act, 2003

 The Payment and Settlement Systems Act, 2007

 The Limited Liability Partnership Act, 2008

 The Companies Act, 2013

 the
Code Eco-System of IBC
IBBI – apex body for promoting transparency & governance in the
Insolvency and Bankruptcy
administration of the Code; will be involved in setting up the
Board of India (IBBI) infrastructure and accrediting IPs & Ius.
National Company Law Tribunal

IUs - centralized repository of financial and credit information of

(Adjudicating Authority)

borrowers; would validate the information and claims of creditors vis-à-

IPAs IUs vis borrowers, as needed

IPAs - professional bodies registered by the Board to promote and

regulate the insolvency profession; these bodies will enrol Ips-
IPs
IPs - licensed professionals regulated by the IBBI; will conduct resolution
process; to act as Liquidator; appointed by creditors and will assume
the powers of suspended board of directors National
COCs AA- would be the NCLT for corporate insolvency; to entertain or dispose
any insolvency application, approve/reject resolution plans, decide in
respect of claims or matters of law/facts thereof

CoCs - consists of financial creditors who will appoint and supervise

Insolvent unit actions of IPs; need to approve the resolution plan
  5 Parts, 7 Chapters in Part- II, III, IV
Framework  255 Sections & 11 Schedules (245 to 255)

of the Code IBC, 2016 – Analysing the 5 Parts

PART II Part IV
Part III Part V
CIRP REGULATION OF MISCELLANEOUS
PART-I- IIRP
IPA o Section 224-255
o PRELIMINARY - 1 &
o Chapter –Section & o (Section 245-
& 255 enables
1-3 LIQUIDATION
BANKRUPCY IU o Amendments in
o 7 Chapters - other statutes,
o 7 Chapters o 7 Chapters
Sections 4-77 11 legislations
o Section 78-187 o Section 188-223
o Section 5 o Section 79
definitions definitions
the
Code
Deals
with Corporate
Liquidation

Corporate
Insolvency
Resolution
Process
 Code (Act) Rules & Regulations- framed by IBBI
Part II of IBC 2016 The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
( S 4 to 77)- CIRP & 2016 (w.e.f. 01.12.2016). Specifies the application forms for filing the matters in
AA- form 1 to form 6
Liquidation of Corporate
person  Insolvency and Bankruptcy Board of India (Insolvency Resolution Process
For Corporate Persons) Regulations, 2016. 3rd Amendment. 7th Nov. 2017)
 C I Preliminary S 4 & 5
 Insolvency and Bankruptcy Board of India (Voluntary Liquidation process)
 C II Corporate Insolvency
Regulations, 2017 3rd Amendment. 7th Nov. 2017)
Resolution Process S 6 to 32
 C III Liquidation Process S 33 to
54  The Insolvency and Bankruptcy Board of India (Fast Track Insolvency
Resolution Process for Corporate Persons) Regulations, 2017 (w.e.f. 15th
 C IV Fast Track Corporate June, 2017) 3rd Amendment. 7th Nov. 2017)
Insolvency Resolution Process S
55 to 58
 C V Voluntary Liquidation of
Corporate Persons S 59
 C VI Adjudicating Authority for
Corporate Persons
 C VII Offences and Penalties
What is 'Insolvency’
Insolvency is when an organization, or individual, can no longer meet its financial
obligations with its lender or lenders as debts become due. Before an insolvent company, or
person, gets involved in insolvency proceedings, it will likely be involved in informal
arrangements with creditors, such as making alternative payment arrangements. Insolvency
can arise from poor cash management, a reduction in cash inflow forecasts or from an
increase in expenses.

Read more: http://www.investopidia.com

In legal terminology, the situation where the liabilities of a person or firm exceed its assets. In
practice, however, insolvency is the situation where an entity cannot raise enough cash to
meet its obligations, or to pay debts as they become due for payment. Properly called
technical insolvency, it may occur even when the value of an entity's total assets exceeds
its total liabilities. Mere insolvency does not afford enough ground for lenders to petition for
involuntary bankruptcy of the borrower, or force a liquidation of his or her assets.

Read more: http://www.businessdictionary.com/definition/insolvency.html

General Understanding.docx
 FC- Financial Creditors- any person to whom a
Who can financial debt is owed and includes a person to
CIRP is a Trigger whom such debt has been legally assigned or
360D transferred to….

Approach FC
CD CD/CA-
• corporate debtor; or
OC- a person to
whom an • a member or partner of the corporate debtor
who is authorised to make an application for the
operational debt
is owed and
CD corporate insolvency resolution process under
includes any the constitutional document of the corporate
person to whom Mandatory debtor; or
such debt has Time for CIRP- • an individual who is in charge of managing the
been legally 180 days with operations and resources of the corporate
assigned or one time debtor; or
transferred… maximum • a person who has the control and supervision
extension of 90 over the financial affairs of the corporate debtor
days. Total 270
days
 CASES ADMITTED
397

96
83

43 39
36
30
24
13 14 15
4
Series1
Jan Feb Mar Apr May June July Aug Sep Oct Nov
Series1 4 13 14 24 30 36 43 83 96 39 15

IPS-1143 IPS
250
200
150
100
50
The Code 0
Jan Feb Mar Apr May June July Aug Sep Oct Nov

on the ground Series1 9 40 36 36 148 226 217 177 137 74 43

nd
 IBC was approved by both Houses of the
Implementation
Hitches of the Code
Parliament and received the presidential assent in
May 2016. It was made operational from 1
December 2016. Everyone involved has been
surprised with the speed and commitment with
which it has moved forward in the last 12–18
months. IBC is often touted as the second most
important legislative reform (after GST) that the
incumbent Government has undertaken, as it is
expected to resolve
The NPA problem, make the exit process
easier for investors, attract fresh capital and
foreign investors, channelize capital to more
productive assets and give a fillip to India’s
ease of doing business ranking. While the new
Code elicited praises and excitement from
market participants, it also led to concerns
regarding the readiness of the infrastructure
for proper implementation.
The following is a point-of-view onthe top 10
concerns raised at the beginning of the
journey and also how the market seems to
be developing. These are our views and
understanding of the on-ground situation
and are purely based on our experience in
the last few months and interactions with
other IPs, lawyers, bankers, creditors,
promoters and various other stakeholders
involved

Concerns Remarks
IBC is a transformational reform in many ways and looks to make some very important
Constitutional structural changes. Many concerns were raised initially around the constitutional validity of
some of the provisions of the Code. Essar Steel filed a petition in Gujarat High Court
Validity of the Code Challenging Reserve Bank of India’s decision to refer it to the NCLT to start CIRP. Similarly,
multiple cases/appeals are filled against the applications filed for CIRP; however, no appeal
has significantly impacted the CIRP process, once initiated. In the first case admitted under
IBC, Innovative vs. ICICI Bank, a writ petition was filed challenging the constitutional
validity of section 4 to section 32 of the Code. However, NCLAT decided that the provisions of
the Code shall have effect notwithstanding the provisions of any other law for the time being
in force. The Innovative matter is currently. Presentation 2.pptx

The NCLT may not be able to handle plethora of proceedings under IBC. The NCLT was
The NCLT may not constituted on 1 June 2016 with 10 benches and one principal bench. A major challenge
be able to handle foreseen for the Code was the tidal flow of cases to the NCLT. In addition to new cases filed
for resolution under IBC, there was a significant backlog of cases that were transferred from
plethora of CLB. Also, winding up cases with high courts, corporate recovery cases with the debt
recovery tribunals (DRTs) and rehabilitation cases with the BIFR were transferred to the NCLT.
proceedings under We understand that as of now ~ 1,540 cases are filed with the NCLT under IBC, of which ~ 299
IBC are admitted, and we understand that the NCLT has coped well with the workload. The NCLT
would continue to play a very critical role in the IBC ecosystem as more complex filings
happen over the next few months. We also understand that, discussions are already onto
increase the number of benches and change single-member benches to double-member
 Concerns Remarks
Role of Regulator IBBI has a critical role in holding thee tire ecosystem of IBC together and making sure the Code is moving
forward in the right direction. It was established on 1 October 2016 and has already made significant progress
in setting up the IPA, conducting exams to registers IPs and issuing multiple regulations to support the smooth
implementation of the Code. IBBI has been at the forefront in building capacity, educating the market and
proactively supporting the implementation of the Code. However, the job has not been easy and the
expectations are high. Looking at the role played by the regulator in matured markets, we believe IBBI must
continue to provide a lead role in a smooth implementation of the Code over the next few years.

Stringent Timelines One of the hallmark of IBC is the strict time-bound resolution process it proposes. Erstwhile insolvency laws and
regulations were not very effective in terms of standing by the timelines specified. The specified time limits for
provided in the resolution under IBC is a breath of fresh air to the creditors but at the same time, is considered an uphill task to
achieve. There have been deviations in a few cases from the 14-day timeline for the NCLT to admit or reject a
Code case. NCLAT in the case of J K Jute Mills Company Limited. stated that the 14-day timeline for the NCLT was
not mandatory. However, other procedural timelines, for example, for public announcement, have been
broadly adhered to. The real test for IBC timelines would be to get cases resolved within a period of 180/270
days with all necessary approvals.

No Information In the IBC design, the IU enables quicker initiation of cases by providing access to irrefutable and transparent
evidence of default. In the absence of IUs, initiating a case as well as forming the CoC will take longer and be
Utilities is in place more challenging than envisaged. This in turn will make it difficult to meet the 180-day timeline. IBBI notified
Information Utilities Regulations, effective from 1 April 2017. The regulations provide for a framework and
technical standards for registration and regulation of IUs. National E-Governance Services Limited has been
appointed as IU on 27th Sep 2017.

The CoC is a key decision making bodyin every CIRP. The speed of decision making at the CoC should match
Speed of decision the pace at which the Code has progressed. Banks are in the process of developing internal guidelines &
making by COC decision matrices to enable the attendees of CoC to have efficient decisions in time. The speed of CoC would
also depend upon the expertise of the IP. The IP should provide relevant information before time to CoC
members, to help them take internal approvals and come better prepared for CoC voting.
Concerns Remarks
OCs misusing the Since the trigger of the Code is a default of only INR1 lakh, there were concerns regarding frivolous fillings by
OCs. Out of the ~ 299 cases admitted by the NCLT, ~ 50% have been initiated by OCs. Also, most of the cases
intent of the Code withdrawn from the total of ~1,000 filed, are related to cases where the corporate debtor and OC make an
out-of-court settlement. This has resulted in the use of IBC as a mechanism for recovery instead of resolution.
However, this is also driven by lack of other remedies available to OCs following the introduction of the Code
Better understanding of the position of OCs under liquidation waterfall and the costs involved as an

Availability of IPs IPs form the backbone of the Code. However, with limited guidance and significant liabilities, there were
initially many apprehensions around professionals coming forward to take up the role of IP. Their role requires
a fine balancing act, given that they are in charge of managing the debtor company and are accountable to
the CoC and the adjudicating authority for their actions. Equally important are and there are already ~ 1095
IPs registered with more than 10 years of professional experience. Only ~ 299 cases have been admitted untill
now and the outcome of most of them would only be tested in the next few months, hence most of the
registered IPs still do not have practical experience of successfully running and closing CIRP. Therefore, while
the supply side concern has been addressed, the jury is still out on the quality and performance of IPs.
Personal qualities, such as integrity and independence. Fortunately, professionals have reacted very positively
toward the opportunity

Pushback from the Taking control of the corporate debtor and suspending the powers of the BoD (promoters) has been seen a
major challenge in the implementation of the Code. Based on our experience and discussion with other IPs, if
promoters/ the communication is kept clear and transparent with the promoters and other stakeholders, promoters are
managements. largely co-operating with the process. Promoters genuinely interested in the revival of enterprises. At the same
time, there have been sporadic instances of physical threats to IPs from promoters and promoters threatening
Transition from to sue IPs for loss of a contract. CIRP has to be seen and communicated by IP as a resolution process for the
benefit of all stakeholders. The experience and knowledge of the BoD (promoters) should be actively
“Debtors in leveraged by IP, to maintain a going concern and cause minimal disruption to operations while a resolution is
possession to being worked out to maximize return for all stakeholders. would not see their displacement as threat but as an
opportunity to focus on putting together a resolution plan.
creditors in control”
would be
challenging
Who to become an IP
Applicable for the period 1st July, 2017 to 31st December, 2017……..
Syllabus_revised_LIE_2.pdf

Applicable for the period 1st Jan, 2018 to 31st Mar, 2018…….
. Exam Syllabus-Jan-2018.docx

Applicable for the period 1st April, 2018 to 30 June, 2018…….

th

Proposed change in examination pattern-

LIE_consultation_paper (3).pdf
Examination Resources Bare Acts- www.ibbi.gov.in
Mock Papers from www.icsiipa.com
E-Reources from www.iiipaicai.in
Books from Taxman- IBC code
Case Laws from IBC practical cases-ICSI publications
General Laws from ICSI intermediate study materials
Case laws from www.ibbi.gov.in
Finance and accounts- CMA final study materials
Miscellaneous topics NCERT- Civics- class X & IX
Pass Mark- 60
Total Marks
100
Questions-87
Negative
Marks-25%
Test time- 2
hours