Insolvency & Bankruptcy Code-2016 Journey so far Dr. Navrang Saini Whole Time Member, Insolvency & Bankruptcy Board of India

ROLE OF IBBI

Institutional Framework under IBC, 2016 Insolvency & Bankruptcy Board of India (IBBI) Insolvency Professional Agencies (IPA) Insolvency Professionals (IP) Information Utilities (IUs) Adjudicating Authority Institutional Framework under IBC, 2016

Insolvency in Pre IBC Regime - Corporates Companies Act, 1956 /2013 Official Liquidator – attached to HCs ICLS officers & bureaucratic machinery Insolvency in Pre IBC Regime - Corporates

Insolvency Under IBC Regime Insolvency Professional Private Professionally Qualified Individual Insolvency Under IBC Regime SO, Basically the process has been privatised & NEED TO REGULATE the same led to establishment of IBBI

IPs IPAs IUs Registered Valuers PROFESSION Corporate insolvency resolution Corporate liquidation Individual insolvency resolution Individual bankruptcy PROCESSES IBBI: a Unique Regulator (It regulates a profession as well as processes)

FACILITATIONS BY THE REGULATOR Amendment to CIRP regulations (8 times) Amendment to Liquidation regulations (2 time) Amendment to IP regulations(2 time) Amendment to IU Regulations (3 time) Issuance of Circulars & Guidelines FACILITATIONS BY THE REGULATOR

IBBI is the authority for Valuation Rules Valuation – the most critical aspect The Companies (Registered Valuers and Valuation) Rules, 2017 notified under the Companies Act, 2013, provides a comprehensive framework for development and regulation of the profession of valuers. The Central Government delegated its powers and functions under section 247 of the Companies Act to the IBBI vide notification dated 18th October, 2017. According to this notification, only a person, who is registered with the IBBI as an RV, can conduct valuations required under the Companies Act, 2013 and the Code. With effect from February 1, 2019, no insolvency professional shall appoint a person other than a registered valuer to conduct any valuation under the Code or any of the regulations made there under. IBBI is the authority for Valuation Rules

Status of 12 Big Accounts 3 resolutions completed 3 resolutions ordered 1 failure to implement approved plan, CoC reconstituted 5 at various stages including one in liquidation. Status of 12 Big Accounts

Liquidation Order in 378 CIRPs (as on March 31, 2019) Initiation: 137 FC, 131 OC, 83 CD Erstwhile BIFR/ Not going concern: 283 75% cases - economic value eroded before CIRP admission Liquidation Order in 378 CIRPs (as on March 31, 2019)

Resolution in 94 CIRPs (as on March 31, 2019) Initiation: 50 FC, 26 OC, 18 CD Erstwhile BIFR/ Not going concern: 32 Resolution in 94 CIRPs (as on March 31, 2019) (Amounts in crore) *Excluding data w.r.t. Essar Steels.

Initiation of CIRPs (as on March 31, 2019)

Status of cases admitted under CIRP (as on March 31, 2019)

Disciplinary Proceeding The Insolvency and Bankruptcy Code, 2016 (Code) envisages that an insolvency professional may be appointed as IRP, RP, liquidator, or a bankruptcy trustee if no disciplinary proceeding is pending against him. The Code, however, does not define ‘disciplinary proceeding’. Section 219 envisages issue of show cause notice following an inspection or investigation and Section 220 envisages constitution of a disciplinary committee for consideration of the inspection or investigation report. Various regulations made under the Code envisage issue of show cause notice based on findings of an inspection or investigation or on material otherwise available on record. They also envisage constitution of disciplinary committee for disposal of show cause notice. Disciplinary Proceeding

Pendency of Disciplinary Proceeding (i) a disciplinary proceeding is considered as pending against an insolvency professional from the time he has been issued a show cause notice by the Insolvency and Bankruptcy Board of India till its disposal by the disciplinary committee; and (ii) an insolvency professional who has been issued a show cause notice shall not accept any fresh assignment as interim resolution professional, resolution professional, liquidator, or a bankruptcy trustee under the Code. Pendency of Disciplinary Proceeding

Disciplinary Committee Process Case Referred to Disciplinary Committee up to 180 days. Finding Against IP IP Hearing IP did not Appear for Hearing Finding Upheld. Finding Overturned Outcome Advised to IP and Complainant Impose Punishment/ Penalty Closing of SCN without any Directions. Sanction Publish on IBBI Website Monitoring of Execution of Order- Monitoring Penalty Order Closed

Section 217 and section 218 Board on receipt of complaint (Sec.217) or reasonable ground to believe contravention of any provision of the Code [Sec 218(1)] Inspection/ Investigation may be conducted (IP/IPA/IU/RV/RVO) Report Submitted to the Board by I.A (218(6)). Show Cause notice Sec (219) Board Considers the Report * ( Reg. 11(1) of IBBI Insolvency and Investigation ) Reg.2017. * ( Reg. 11(2) of IBBI Insolvency and Investigation ) Reg.2017.

Issue Show Cause Notice Board prima facies opinions that sufficient cause exists under Sec.220 or 236 (2) of IBC. Issue Show Cause Notice 21 Days time to noticee to reply Refer SCN to Disciplinary Committee with record/ written submission. Opportunity of Hearing DC to dispose of within 180 days of issue of SCN or if DC is satisfied it may close SCN without notice [Sec 220 (2)].

Status of adjudication DETAILS OF PENALTY IMPOSED Status of adjudication S.no Particulars No. of Orders Issued 1 Cancellation of registration 4 2 Suspension 3 Warning Restitution 5 Disgorgement 6 Fine 7 Others Total No. of orders issued 13

CHALLENGES Resolution vs. Liquidation Resolution vs. Recovery Interest of Stakeholders Resolution Plan Resolution Applicant Markets: Interim finance, Resolution Plan, Liquidation Assets Large Number of Creditors Cross Border Insolvency Asymmetry of Information CHALLENGES

Role of CoC not envisaged under the Code. Do they (COC) have some duties? (like that of the Directors under the Companies Act, 2013) How to control the conduct of CoC? Waterfall mechanism Code differentiates between FC and OC as conceptualised by BLRC. But should the distinction continue right upto distribution priorities, as both are under the class of unsecured creditor. Unsecured FC appear in 4 th rank and Unsecured OC appear in 6 th rank. Globally, priority to secured creditors is given over unsecured creditors but there is no distinction between FC and OC. CHALLENGES

NEXT STEPS Reviewing Regulations Graduate Insolvency Program, National Insolvency Program Individual Insolvency Cross Border Insolvency Valuation Standards NEXT STEPS

For any queries, you may write to – dr.navrang@ibbi.gov.in THANK YOU !!! For any queries, you may write to – dr.navrang@ibbi.gov.in