IBBI Seeks Reforms In Auction Process And Fund Management Under IBC

The Insolvency and Bankruptcy Board of India (IBBI) has proposed several changes to improve the liquidation process under the Insolvency and Bankruptcy Code (IBC).

A key proposal includes allowing IBBI to manage the corporate liquidation account (CLA) permanently, aiming to ease claims and improve fund management. Other proposals include reviewing the auction process, requiring transparency in compromise schemes, and allowing voluntary liquidation despite uncalled capital. The changes also introduce a provision for forfeiting the Earnest Money Deposit (EMD) if bidders provide false information, ensuring a more efficient and transparent auction process.

The IBBI aims to improve the management of unclaimed proceeds in voluntary liquidation and requires liquidators to seek closure approval from the Adjudicating Authority (AA). Experts believe these changes will reduce delays, enhance efficiency, and benefit stakeholders.