IBBI amends resolution norms, dissenting creditors to get payment on priority
This story was originally published at 10:10 IST on 29 May 2025
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NEW DELHI – In its fourth amendment to the Insolvency Resolution Process for Corporate Persons Regulations, 2016, the Insolvency and Bankruptcy Board of India has tweaked multiple regulations to improve the resolution ecosystem, including introducing a provision to protect the rights of dissenting financial creditors, the regulatory body said in a gazette notification.
Payment to the creditors who vote against a resolution plan will be done on priority and on a pro-rata basis in cases where the approved resolution plan proposes stage-wise payments, the notification dated Monday said. The move is aimed at ensuring fair treatment for financial creditors who vote against a resolution plan but are still subject to its implementation. The amendments took effect from Tuesday.
To broaden the scope of the resolution process, the Insolvency and Bankruptcy Board of India said resolution professionals – with the approval of the committee of creditors – can invite expression of interest for sale of assets in tranches or in whole, or both. This will allow maximising the value of transactions and enable investors to target only viable or core assets.
The Insolvency and Bankruptcy Board of India also announced that the resolution professionals can invite providers of interim finance to attend meetings of committee of creditors as observers without voting rights, thereby facilitating greater transparency among financial stakeholders. The regulatory body has made a few procedural changes like explicitly listing plans that are non-compliant with the Insolvency and Bankruptcy Code, 2016, before the committee of creditors even though the creditors panel can only consider plans that are compliant with the 2016 code.
These changes come amid the government's intent to amend the Insolvency and Bankruptcy Code, 2016, in the upcoming Monsoon Session of Parliament to streamline the resolution processes further. The Budget for 2023-24 (Apr-Mar) had said that all financial sector regulators would be requested to carry out a comprehensive review of existing regulations to simplify, ease and reduce the cost of compliance. End
Reported by Priyasmita Dutta
Edited by Avishek Dutta
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