Page 47 - DTPA Journal Aug 18

DTPA - J | 2017-18 | Volume 3 | August 2018

Process. Having witnessed such situations, the professional is appointed.
authorities sort an amendment with the view that ØPublishing of Expression of Interest
minority votes does not result in failure of the insolvency
resolution process. Hence in the recent ordinance the The RP shall publish an invitation for expression of
threshold of 75% has been brought down to 66% for interest (EoI) by the 75th day from the insolvency
important decision like appointment of RP, raising of commencement date.
finances, selling of assets, and approval of resolution The invitation shall specify the following:-
plan, for routine decisions the threshold has been set at
51%. 1. criteria,
ØVoting share of Financial Creditor in 2. ineligibility,
absence of pre-determined rate of interest. 3. the last date for submission of EoI
With the insertion of explanation to Section 5(8) which 4. and other details as required by the CoC
made the home buyers financial creditor, it was
necessary to determine the rate of interest as the The submission of Expression of Interest shall not
require anypayment of non-refundable deposit and any
quantum of total debts which includes the principal Expression of Interest received after the specified time
amount and interest is considered as the base to
determine Voting Share of the financial Creditor. When shall be rejected.
such rate has not been pre-determined between the The resolution professional shall conduct due diligence
parties it may lead to controversies hence, based on material on record and issue a provisional list
amendmentprovided that where rate of interest has not of prospective resolution applicants within 10 days of
been agreed to between the parties in case of creditors the last date of submission of Expression of Interest. On
belonging to a particular class, the voting share of such considering objections to the provisional list, the
a creditor shall be in proportion to the financial debt that resolution professional shall issue the final list of
includes an interest at the rate of eight per cent per prospective resolution applicants, within 10 days of the
annum. last date for receipt of objections.
ØRelief to Micro, Small and Medium ØContents of the Request For Resolution
Enterprises and changes to 29A Plans (RFRP)
With respect to the MSME sector, the latest The RFRP shall detail each step in the process,
amendments also give power to the central government and the manner and purposes of interaction
to allow further exemptions or modifications, if it is between the resolution professional and the
required in the public interest. prospective resolution applicant, along with
corresponding timelines.
The Amendment Ordinance has inserted section 240A,
which highlights the application of this Code to micro, The resolution plan needs to demonstrate that
small and medium enterprises. Section clearly states (a) it addresses the cause of default;
that the provisions of section 29A in relation to
promoters having an NPA or being a promoter of a (b) it is feasible and viable;
company under CIRP shall not apply to the resolution (c) it has provisions for its effective
applicant in respect of corporate insolvency resolution implementation;
process of any micro, small and medium enterprises.As
per the ordinance now promoters of MSME shall be (d) it has provisions for approvals required
able to bid for their enterprise undergoing Corporate and the timeline for the same; and
Insolvency Resolution Process (CIRP), provided the (e) the resolution applicant has the
person is not a wilful defaulter and does not attract other capability to implement the resolution
stated disqualifications under section 29A. plan.
ØTenure of IRP The CoC shall evaluate the resolution plan strictly
as per the evaluation matrix to identify the best
The Interim Resolution Professional is appointed for a
period of 30 days, in case of delay of appointment of resolution plan and may approve it with the
Resolution Professional, the IRP is supposed to required majority. If approved by the CoC, the
continue to operate the management of Corporate resolution professional shall endeavour to submit
Debtor. Where the appointment of resolution the resolution plan approved by the CoC to the
Adjudicating Authority at least fifteen days before
professional is delayed, the interim resolution the maximum period for completion of corporate
professional shall perform the functions of the
th
resolution professional from the 40 day of the insolvency resolution process, along with a
compliance certificate in the specified Form.
insolvency commencement date till a resolution

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