The detailed notes have to be provided to the Committee of Creditors (CoC) when the resolution plans are considered.
The Insolvency and Bankruptcy Board of India (IBBI) has been working on ways to boost the ecosystem under the Insolvency and Bankruptcy Code (IBC) that provides for a market-linked and time-bound resolution of stressed assets.
“Due diligence with respect to section 29A compliance is paramount as it safeguards the integrity of the process by ensuring that only credible resolution applicants participate in the process. It also reduces the risk of legal challenges post-approval of resolution plan,” IBBI said in a circular on November 18.
Section 29A lays down the ineligibility criteria for resolution applicants, including barring promoters of companies undergoing resolution process from the bidding process.
The resolution professionals and prospective resolution applications are required to comply with various requirements under the IBC to ensure a credible process. Among other requirements, an applicant should submit an undertaking with the Expression of Interest confirming they are not ineligible for bidding.Against this backdrop, IBBI has asked resolution professionals to “place a detailed note on section 29A compliance before the CoC when resolution plans are considered and ensure that deliberations and observations of the CoC are properly recorded in the minutes”.