The Insolvency and Bankruptcy Board of India (IBBI) has proposed changes in the insolvency proceedings.

The IBBI has proposed that the valuers should explain the valuation methodology to the committee of creditors (CoC)before the finalisation of the valuation report. At present, the valuation report is disseminated to the CoC only after the receipt of resolution plans.

“Consequently, until this juncture, the CoC possesses a restricted understanding of pivotal valuations, namely the Fair Value and Liquidation Value,” said the discussion paper.

The unavailability of this information constrains the CoC’s decisions regarding the eligibility criteria for resolution applicants and the evaluation matrix.

The IBBI has proposed the resolution plan be structured in two parts — one that would deal with the payments or inflows under the plan while the second part would deal with the distribution to the various stakeholders.

“In case of any dispute or litigation, the disputed amount may be kept in an escrow account and be distributed after the litigation in respect of distribution attains finality,” it further said.

The paper has also proposed providing clarity in terms of minimum entitlement to dissenting financial creditors.

Amongst the proposals, the IBBI has also mooted that the insolvency professional (IP) should seek approval of all components of the insolvency resolution process cost, including the expenditure incurred for ongoing operations of the debtor.

Further, to ensure that the resolution process remains time-bound, even if not within the 180-day timeline, it has been suggested that the RP should hold regular meetings of the Committee of Creditors (CoC) every month.