IBBI Proposes Changes To Process Of Issuance Of Record Of Default By Information Utility, Invites Comments Till 31.05.2024

The Insolvency and Bankruptcy Board of India (“IBBI”) on 10.05.2024 has published a Discussion Paper on “Strengthening the process of issuance of record of default by Information Utility”. The IBBI has also invited comments from public/stakeholders regarding proposed changes to the framework pertaining to the process of issuance of record of default by Information Utility”. The comments can be submitted online at www.ibbi.gov.in till 31.05.2024. The Discussion Paper primarily proposes changes to Strengthen the Process Of Issuance Of Record Of Default (Rod). Proposed Changes ISSUE 1: Providing sufficient time to the debtor to respond after delivery of the information of default by the Information Utility (IU). In order to provide a fair and reasonable opportunity to the debtor to respond, Regulation 21 (2) (a) and 21 (2) (b) of the IU Regulation may be amended to provide that IU shall allow sufficient time of seven days after delivery of information of default to the debtor. Further, IU shall continue to remind the debtor at least three times for confirmation of information of default, in case the debtor does not respond, by allowing seven days each time instead of three days for the debtor to respond. ISSUE 2: Delivery of information of default on debtor provided e-mail id for authentication in case of certain category of creditors. In case of creditors other than banks included in the second schedule of the Reserve Bank of India Act, 1934, the delivery of information of default or the reminder may be restricted to the debtor provided email id i.e. e-mail address of the debtor registered with the information utility. (ii) e-mail address of the debtor recorded with MCA 21 and the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). ISSUE 3: Submission of documents by creditors showing proof for debt/security, default and latest acknowledgement of debt. To mandate creditors other than banks included in the second schedule of the Reserve Bank of India Act, 1934 to mandatorily upload proof of debt/security, default and latest acknowledgement of debt while submitting the information to the IU in Form C. Further, to ensure the genuineness of the documents submitted as proof of debt/security, default and latest acknowledgement of debt, the creditors may be required to submit a declaration along with the Form -C. “I, [Name of the user], do hereby verify that the contents of this Form along with documents submitted are true, valid and genuine to the best of my knowledge, information and belief and no material facts have been concealed therefrom”. ISSUE 4: Proper due diligence by IU before issuance of RoD IU shall verify key details such as e-mail Id of the debtor, proof of debt/security, latest acknowledgment of debt and proof of default before issuance of RoD so that it can act as a conclusive proof. ISSUE 5: Issuance of RoD in case Debtor disputes the information of default. In case the debtor disputes the information of default presented to them by the IU, it may be made mandatory for them to upload proof of such dispute to deter frivolous disputes. Further, in case of financial creditors which are banks included in the second schedule of the Reserve Bank of India Act, 1934, when debtor disputes the information of default but documents showing latest acknowledgment of debt by the debtor are available with IU, then IU will record the status of authentication in authenticated category and issue the 'record of default' under authenticated category. In addition to this, in case debtor disputes a part of the default, then IU will record the status for undisputed part of debt/default under authenticated category and issue the 'record of default' for the undisputed amount under authenticated category ISSUE 6: Incorporating additional details in Form – D (Record of Default) In order to enhance the effectiveness and admissibility of the ROD, it is proposed to specify certain additional details to the existing format of RoD Public Comments Invited The IBBI has invited comments on the aforementioned proposals above and the draft regulations Insolvency and Bankruptcy Board of India (Information Utilities) (Amendment) Regulations, 2024 which are annexed to the Discussion Paper. After considering the comments, the Board proposes to make regulations under section 196 of the Code. Comments may be submitted electronically by 31st May, 2024 on the official website of IBBI. Click Here To Read/Download Circular

IBBI Proposes Changes To Process Of Issuance Of Record Of Default By Information Utility, Invites Comments Till 31.05.2024

Aditi Gupta

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