The Insolvency and Bankruptcy Board of India (IBBI) has proposed monitoring committees for implementing resolution plans under the Insolvency and Bankruptcy Code (IBC) rules. These changes seek to address challenges in implementing resolution plans and bolster confidence in the insolvency resolution process.
The move came after a Supreme Court judgement emphasising statutory recognition for such committees to ensure smooth implementation of approved plans.
The apex court, in its judgment on November 7, 2024, emphasised the need for statutory recognition of such committees and made several key recommendations regarding their constitution and functioning.
Currently, these committees are constituted based on directions from adjudicating authorities.
Further, the court recommended empowering the committee of creditors (CoC) to constitute monitoring committees, which would oversee plan implementation and statutory compliance.
In a discussion paper issued on Tuesday, the CoC will have the authority to decide the tenure, composition, and functioning of these committees.
The committees will include representatives from the CoC, the resolution applicant, and an insolvency professional who will serve as chairperson. The successful resolution applicant will bear the expenses of the committee, with a cap on the chairperson’s fees.
Under the proposed framework, the committees will monitor the transfer of assets, compliance with statutory requirements, and the distribution of resolution proceeds. They will also submit quarterly reports to adjudicating authorities and IBBI, ensuring transparency and accountability.
IBBI has asked the stakeholders to submit their comments on the draft proposals by December 9.
