IBBI Enables Asset Transfers During Personal Guarantor Bankruptcy

The Insolvency and Bankruptcy Board of India (IBBI) has amended the Bankruptcy Process for Personal Guarantors to Corporate Debtors Regulations, 2019 to align the regulatory framework with recent amendments to the Insolvency and Bankruptcy Code, 2016 (IBC).

The amendments introduce provisions relating to transfer of assets under Section 28A of the Code, prescribe approval and disclosure requirements for bankruptcy trustees and replace prescribed forms with forms to be notified separately through circulars.

1. Provisions Introduced for Asset Transfer Under Section 28A

The amended regulations facilitate the implementation of Section 28A of the Insolvency and Bankruptcy Code, 2016, which provides a framework for transfer of assets in specified circumstances during the bankruptcy process.

The changes are intended to ensure a structured mechanism for carrying out asset transfers in accordance with the amended provisions of the Code.

2. Approval Requirements for Bankruptcy Trustees

The regulations now prescribe specific approval requirements to be followed by bankruptcy trustees while undertaking actions connected with asset transfers under the amended framework.

These requirements are intended to ensure transparency, accountability and appropriate oversight in the administration of bankruptcy estates.

3. Enhanced Disclosure Obligations

The amendments also introduce disclosure requirements relating to asset transfers and related actions undertaken during the bankruptcy process.

Bankruptcy trustees will be required to comply with prescribed disclosure obligations to ensure that stakeholders are adequately informed about material actions affecting the bankruptcy estate.

4. Alignment With Recent Amendments to the IBC

The revised regulations have been updated to align with recent amendments made to the Insolvency and Bankruptcy Code, 2016.

The amendments seek to ensure consistency between the substantive provisions of the Code and the procedural framework governing bankruptcy proceedings involving personal guarantors to corporate debtors.

5. Prescribed Forms to Be Notified Through Circulars

A significant procedural change introduced by the amendments relates to prescribed forms under the Regulations.

Instead of incorporating forms directly within the Regulations, the amended framework provides that forms shall be:

• Notified separately through IBBI circulars; and
• Updated from time to time as required

This approach allows greater flexibility in revising procedural documentation without requiring formal amendments to the Regulations.

6. Objective of the Amendments

The amendments aim to strengthen the bankruptcy framework applicable to personal guarantors to corporate debtors by facilitating implementation of asset transfer provisions under Section 28A, enhancing transparency through approval and disclosure requirements and ensuring alignment with recent legislative changes under the Insolvency and Bankruptcy Code, 2016.

The move also improves regulatory flexibility by enabling prescribed forms to be issued and updated through circulars.