The Insolvency and Bankruptcy Board of India (IBBI) has proposed simplifying the forms used in the corporate insolvency resolution process (CIRP) by resolution professionals (RPs). This proposal, outlined in a discussion paper released earlier this week, aims to reduce the compliance burden.
“The proposed changes to the CIRP Forms and the compliance framework aim to significantly reduce the compliance burden on Insolvency Professionals while ensuring that the IBBI receives relevant and timely information for effective monitoring of the CIRP. The streamlining of Forms, auto-population of data from existing sources, and the move to a monthly reporting cycle will make the compliance process more efficient and less time-consuming for IPs,” the discussion paper said.
One significant change is the introduction of a monthly compliance reporting framework. Under this new system, insolvency professionals would report the status and progress of the CIRP as of the last day of each month by submitting the relevant forms by the 10th day of the following month.
Currently, the filing timelines for CIRP forms are tied to various events, such as the insolvency commencement date, public announcement, appointment of RPs, and issuance of the information memorandum. This results in different filing deadlines for insolvency professionals managing multiple CIRP assignments, complicating the filing process.
“This change will enable IPs to plan their compliances in an efficient manner and submit all Forms for their cases in one go every month. IBBI will also get a consolidated monthly update on the status of all CIRPs. It will reduce the multiple filing of Forms through the month. For instance, an IP handling three CIRP cases with different insolvency commencement dates in January month would file Form CIRP-1 for all three cases by 10th February, reflecting the status as on 31st January,” IBBI said.
Eliminating some forms
The IBBI has proposed eliminating certain forms, such as the pre-assignment form and CIRP Form-6, which details interim finance and the commencement of the insolvency resolution process of guarantors of the company. These eliminations are intended because the relevant details are already captured in other forms.
The revised forms and filing timelines aim to minimize duplicate submissions, auto-populate fields from existing data where possible, seek information pertinent to the stage of CIRP, and streamline the compliance process. This approach is expected to reduce the time and effort required for compliance by insolvency professionals.
There is also a recognised need to shift to automated data and information management systems. Consolidating and revamping forms is beneficial, but the key issue lies in how this extensive data is used to bring about changes and identify the root causes of delays in the CIRP and liquidation processes, according to experts.
The proposed amendments are anticipated to make the process less stringent for insolvency professionals and resolve existing complexities. The single form approach is expected to simplify the process and ensure that corporate resolution remains effective and productive.
