IBBI MAKES MODIFICATIONS TO INSOLVENCY REGULATIONS IN ORDER TO IMPROVE TRANSPARENCY
The Insolvency and Bankruptcy Board of India (IBBI) has changed the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations in order to improve transparency in the insolvency process. The amendments were intended to improve “business insolvency proceedings discipline, transparency, and accountability.”
A resolution professional was required to investigate whether a corporate debtor (CD) had been involved in avoidance transactions, such as preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading, or wrongful trading, and to file applications with the adjudicating authority seeking appropriate relief. According to the IBBI, this not only recovers the value lost in such transactions, allowing the CD to be reorganized through a resolution plan, but it also disincentivizes such transactions, reducing stress on the CD.
SOLVENCY CERTIFICATE OF SURETY FOR ISSUING OF DUPLICATE CERTIFICATES (KVP/NSC) HAS BEEN AMENDED IN RULE 43(2)(VI) OF THE POSB MANUAL VOLUME II
Depositors report that they are having difficulty getting a solvency certificate of surety for the issuance of duplicate certificates (KVP/NSC) for savings certificates issued prior to July 1, 2016. The competent authority has decided to change regulation 43(2) (vi) of POSB Manual Volume II in light of the problems that the competent authority is experiencing.
If the surety’s solvency is questioned by the indemnity bond, accepting authority, the surety’s solvency can be verified using any of the following documents:
i) If he is a government employee, either at the central or state level or at a local government-aided educational institution. To the extent of his wage for the previous 12 months, excluding allowances as confirmed by the employer, the Reserve Bank of India, a public sector organization, or any other body controlled by the government.
ii) On the basis of the surety’s annual income as reported in the last financial year’s Income Tax Return (ITR).
iii) On the basis of the surety’s employer’s certification of the preceding year’s Annual Income Certificate.
iv) A certificate of solvency provided by the revenue body with jurisdiction over the surety’s estate.