Key Amendments to Insolvency and Bankruptcy Code: Personal Guarantors & Corporate Debtors

In a recent update, the Insolvency and Bankruptcy Board of India (IBBI) has introduced significant amendments to the Insolvency and Bankruptcy Code, particularly concerning personal guarantors and corporate debtors. Let’s delve into the details.

Personal guarantors, individuals who legally promise to assume responsibility for a business’s debt if it defaults, now witness eased restrictions in the insolvency resolution process. Insolvency professionals (IPs) can now be appointed as resolution professionals (RPs) for cases involving personal guarantors, thereby streamlining the process and ensuring continuity in handling insolvency proceedings.

Moreover, IBBI has mandated creditor meetings for cases related to personal guarantors, aiming to enhance transparency and fairness in the system. Recognizing the complexities involved, this step ensures better coordination among stakeholders throughout the resolution process.

Furthermore, changes in the voluntary liquidation process require directors to disclose any pending litigation or assessments before statutory authorities when initiating liquidation. Additionally, if a liquidator fails to complete the liquidation within the prescribed timeframe, a meeting of contributors is mandated. The liquidator must then provide a detailed report, including reasons for the delay and the anticipated completion timeline.

These amendments, effective from January 31st, emphasize better coordination and efficiency in the insolvency resolution process, ultimately strengthening the framework of the Insolvency and Bankruptcy Code. Stay tuned to LawWiser for more updates on legal developments shaping the business landscape.

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