IBBI: MANDATES ‘PERFORMANCE SECURITY’ FROM SUCCESSFUL RESOLUTION APPLICANT TO DISCOURAGE FRIVOLOUS RESOLUTION PLANS’ SUBMISSION

Insolvency & Bankruptcy Board of India (‘IBBI’) amends IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 so as to discourage persons, other than genuine, capable and credible resolution applicants, to submit resolution plans; Mandates that the request for resolution plans shall require the resolution applicant, in case its plan is approved by the committee of creditors, to provide a performance security within specified time; Specifies that such performance security shall be forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority (‘AA’), fails to implement / contributes to the failure of the plan’s implementation, in accordance with the terms of the plan and its implementation schedule; Requires disclosure, if the resolution applicant / any of its related parties have failed to implement / contributed to the failure of implementation of any other resolution plan approved by the AA at any time in the past; Directs Resolution Professional to attach evidence of receipt of performance security, while submitting the resolution plan to the AA for approval, also empowers Creditor aggrieved by non-implementation of a resolution plan (which is approved by the AA) to apply for appropriate directions: IBBI