IBBI changes liquidation norms

In a bid to make the process of liquidation time-bound, the Insolvency and Bankruptcy Board of India (IBBI) has brought some changes in the process of liquidation. According to the new rules, the process must be finished within one year of its commencement.

It is stated by the new regulations that a compromise between the stakeholders must happen within 90 days of the liquidation order.
As per the amendments, the financial creditors are required to contribute towards the liquidation costs, when the company does not have resources, which can be later recovered with interest.

The government tabled these amendments to the Insolvency and Bankruptcy Code in Parliament recently. These mandate completion of the process within 330 days, after which the debtor company goes for liquidation. This is an increase from the existing 270 days.