Under the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 amends the Insolvency and Bankruptcy Code, 2016. Under the provisions of the amended code relating to claim verification, the interests of creditors are safeguarded against the debtor Companies through the filing of an insolvency petition initiating the Corporate Insolvency Resolution Process (‘CIRP’). The code effects ‘payment default’ as the basis of triggering insolvency resolution procedure and not the inability of the corporate debtor to repay a demand.
CIRP can be initiated by either financial creditors, operational creditors or a corporate debtor. The scheme under the Insolvency and Bankruptcy Code is divided into two phases, namely ‘revival’ and ‘liquidation’. Under Claim verification, creditors apply for CIRP against the corporate debtor through the constitution of a Committee of Creditors (‘COC’) and appointment of a resolution professional. Where no resolution plan is received or the resolution plan submitted by COC is not approved within the specified time, liquidation proceedings are initiated by court. As per the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 (‘Amended Regulations’), where the debtor Company is under the liquidation process, the stakeholders can update their claims if they have submitted the same during CIRP on submission of a formal proof.
Liquidation under the Amended Regulations:
Verification of claims
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