The Insolvency and Bankruptcy Board of India (IBBI) has notified new norms expediting insolvency resolution for startups, small companies, and unlisted companies with total assets worth under Rs 1 crore.The government agency has notified the new norms under the Insolvency and Bankruptcy Code and christened the regulation as Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017.
Small companies are those defined as such under the Companies Act, 2013 while startups were defined through a notification by the commerce and industry ministry last month.
“The process in these cases shall be completed within a period of 90 days, as against 180 days in other cases. However, the adjudicating authority may, if satisfied, extend the period of 90 days by a further period up to 45 days for completion of the process,” IBBI said in an official release.
The regulation also establishes the whole process to be followed, from initiation of insolvency resolution of eligible debtors till approval of the resolution plan by the authority.
A creditor or corporate debtor can file an application, along with the proof of an existence of default, to the adjudicating authority for initiating fast-track resolution process, the release said.
“After the application is admitted and the interim resolution Professional (IRP) is appointed, if the IRP is of the opinion, based on the records of corporate debtor, that the fast track process is not applicable to the corporate debtor, he shall file an application before expiry of 21 days from the date of his appointment, to the adjudicating authority to pass an order to convert the fast track process into a normal corporate insolvency resolution process,” it added.