In order to strengthen the regulatory framework governing ‘Oversight Committees’ under the Insolvency and Bankruptcy Code (IBC), the Insolvency and Bankruptcy Board of India (IBBI) has proposed to make its constitution ‘mandatory’ for the implementation of all resolution plans.

In a discussion paper released on Tuesday, the IBBI recommended empowering the Committee of Creditors (CoC) to take the final decision on the constitution, composition and period of functioning of the monitoring committee, as part of the resolution plan .

The Oversight Committee would be responsible for comprehensive oversight, which includes monitoring the implementation of the plan, ensuring compliance with the law and facilitating the smooth transfer of assets and control to the successful resolution applicant, a indicated the IBBI. “To ensure transparency and accountability, the committee will submit quarterly progress reports to the adjudicating authority and the Council regarding the implementation status,” he suggested.

Historically, approved resolution plans provided for the constitution of an interim board of directors to govern the corporate debtor (DC) between the date of NCLT approval and the date of transfer (when control is transferred to the resolution applicant retained). However, due to the absence of a statutory/regulatory framework recognizing such an interim mechanism, the constitution and role of the interim boards have largely been determined by the provisions of the specific resolution plans.

In accordance with the proposal, the monitoring committee will be composed of members directly concerned with the successful implementation of the resolution plan. “To ensure balanced representation of interests, the committee will comprise one or more nominees from the CoC and an equal number of nominees from the successful candidate in the resolution,” the IBBI said.

Aishwarya Kaushiq, litigation lawyer, BTG Advaya, noted that the lack of statutory guidelines “often resulted in inconsistencies and enforcement issues”, which should be addressed by the proposed norms.

Madhav Kanoria, associate of Cyril Amarchand Mangaldas, said that with the proposed amendments, the powers and functions of the monitoring committees will be made clear. “This will strengthen the mechanism and provide a uniform governance system for the supervision and implementation of resolution plans,” he added.

Furthermore, in another discussion paper, the IBBI suggested changes in existing regulations to improve clarity in the conduct of insolvency processes; foster a more conducive recourse and enforcement ecosystem for stakeholders; and improve the operational efficiency of processing transfer authorizations (AFA).

In the interest of operational efficiency and greater flexibility for insolvency professionals (IPs) and insolvency professional agencies (IPAs), it is proposed to relax the following deadlines: (a ) for submitting an application for renewal of the AFA to the IPA, the deadline is proposed to be relaxed from 45 days before the expiry date of the previous AFA to 90 days; and (b) for approval or rejection of an AFA application by the IPA, it is proposed that the time limit be relaxed from 15 days from the date of receipt of the application to 45 days from the date of receipt of the request.

“The proposed amendment as a relaxation of the above deadlines is a positive step by the IBBI which would ensure greater efficiency at the IPA level while providing greater flexibility to IPs to ensure continuity of their AFA,” said Piyush Agrawal, Partner at AQUILAW. .

Additionally, the document proposes to extend the time frame within which the corporate debtor (DC) can address its grievances against service providers – insolvency professionals and information services – before the IBBI.

The time limit for filing grievances or complaints is proposed to be extended to 30 days from the “closure of the process” by an order of the adjudicating authority, appellate authority or a court, thereby which would allow stakeholders an appropriate period of time to raise their concerns, while also preserving a reasonable period of time for the service provider after the closure, the IBBI said.

Jasmine Damkewala, senior associate at Circle of Counsels, said allowing grievances to be addressed during the process or immediately after its conclusion facilitates prompt action against any misconduct and strengthens the redress mechanism and, therefore, is much more friendly and efficient than the previous strait. jacket system.