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Important updates in insolvency laws of India

By November 22, 2019 No Comments

1. Personal Guarantors under IBC ambit
The
Ministry of Corporate Affairs (“MCA”) has, vide a
notification dated November 15, 2019, appointed December 1, 2019 as
the date from which the various provisions relating to insolvency resolution
process and bankruptcy process of personal guarantors to corporate debtors
under the Insolvency and Bankruptcy Code, 2016, will come into effect.
In
this regard, MCA has also issued Insolvency and Bankruptcy (Application to
Adjudicating Authority for Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Rules, 2019  and Insolvency and
Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for
Personal Guarantors to Corporate Debtors) Rules, 2019 and governing the
insolvency resolution process and bankruptcy process of personal guarantors to
corporate debtors and appointed 1st day of December,
2019
 as the date from which the said Rules will come into force.
In this regard, the
Insolvency and Bankruptcy Board of India has also released the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019 and Insolvency and
Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to
Corporate Debtors) Regulations, 2019 on November 20, 2019, which
will come into effect from December 01, 2019.
2. NBFCs under IBC ambit
Ministry of Corporate
Affairs (“MCA”) vide its notification dated November
15, 2019
notified Insolvency and Bankruptcy (Insolvency and Liquidation
Proceedings of Financial Service Providers and Application to Adjudicating
Authority) Rules, 2019, setting out the detailed procedure for insolvency and
liquidation proceedings of a specified category of financial service providers,
thereby providing the financial service providers facing a financial crisis, an
opportunity to revive.
In this regard, MCA issued
a notification dated November 18, 2019 providing that the insolvency resolution
and liquidation proceedings of Non-banking finance companies (which include
housing finance companies) with asset size of Rs.500 crore or more, as per last
audited balance sheet, will be conducted in accordance with the provisions of the
Insolvency and Bankruptcy Code, 2016 read with the Insolvency and Bankruptcy
(Insolvency and Liquidation Proceedings of Financial Service Providers and
Application to Adjudicating Authority) Rules, 2019.

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