The Insolvency and Bankruptcy Board of India (IBBI) has, on November 19, 2024, published a discussion paper on Monitoring Committee under the corporate insolvency resolution process (CIRP) proposing mandatory constitution of monitory committees, for the smooth implementation of approved resolution plans under the Insolvency and Bankruptcy Code, 2016 (IBC). The IBBI has also taken note of the observations of the judgment of the Hon’ble Supreme Court passed earlier in the matter of State Bank of India & Ors v The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr., which had inter alia, earlier emphasized the need for statutory recognition of monitory committees and had made several key recommendations regarding their constitution and functioning.
Noting the observations made by the Hon’ble Supreme Court in the above judgment, the IBBI noted that while the current framework under Regulation 38 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), recognized monitoring committees, there is a need to make the constitution of such committees mandatory for implementation of resolution plans.
In view thereof, the IBBI proposed the following amendments to strengthen the regulatory framework governing monitoring committees under the IBC:
- Mandatory Constitution: The proposed amendment aims to make the constitution of monitoring committees mandatory for the implementation of all resolution plans. The CoC will have the authority to decide on the composition and functioning period of the monitoring committee.
- Balanced Representation: The monitoring committee will consist of members with a direct stake in the successful implementation of the resolution plan, including equal number of nominees from the CoC and the successful resolution applicant. The committee will be chaired by the RP or another insolvency professional proposed by the CoC.
- Comprehensive Functions: The committee will be empowered with comprehensive supervision and monitoring functions, including oversight of plan implementation, ensuring statutory compliance, and facilitating the smooth transfer of assets and control to the successful resolution applicant. The committee will submit quarterly progress reports to the Adjudicating Authority and the Board, continuing to function until the completion of all implementation activities.
By way of the said discussion paper, the IBBI has accordingly solicited public comments on the above-proposed amendments.
Authors & Contributors
Partner:
Associates:
Bhawana Sharma
Shreya Chandhok
Kirti Talreja
Rounak Doshi
Bharath Krishna