IBBI Requires Liquidator to Share Progress Reports with Members of the Stakeholders’ Consultation Committee

Circular No. IBBI/LIQ/70/2024; Dated: 22.02.2024

As per Regulation 15 of the IBBI (Liquidation Process) Regulations, 2016, liquidators are required to submit progress reports to the Adjudicating Authority (AA) and the Board within 15 days after the end of every quarter. However, these reports are not shared with the key stakeholders of the ecosystem i.e. creditors, thus leaving them unaware of the progress in the process, thereby creating information asymmetry.

Consequently, IBBI has directed the liquidators to share progress reports with the members of the Stakeholders’ Consultation Committee (SCC) after receiving a confidential undertaking. The liquidator must submit the progress reports under Regulation 15 till the filing of the final report.

Further, Regulation 13 of the Liquidation Regulations mandates the liquidator to submit a preliminary report to the AA detailing various aspects of the corporate debtor and the intended plan of action for carrying out the liquidation process. However, the present regulation lacks SCC consultation in preparation of the preliminary report thereby risking oversight of crucial stakeholder insights.

Accordingly, the IBBI has directed that the liquidator must seek suggestions/observations of the members of the SCC while preparing the preliminary report and finalise the report after considering the suggestions/observations and thereafter, submit it to the AA, Board and members of SCC.

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