IBC processes are designed to maintain transparency, fairness, and legal adherence throughout the insolvency resolution journey, benefiting all stakeholders involved, including creditors, debtors, insolvency professionals (IPs), the Committee of Creditors (CoC), and the Adjudicating Authority (e.g., the National Company Law Tribunal, NCLT). One of the cornerstone requirements under IBC 2016 is completing the resolution process within a fixed timeline of 180 days, extendable by an additional 90 days with requisite approvals, bringing the maximum duration to 270 days. Insolvency professionals must meticulously monitor and adhere to these deadlines, reporting progress regularly to the Adjudicating Authority. Progress reports, submitted periodically, ensure the resolution process advances without delays, promoting efficiency and safeguarding stakeholder interests. Any deviation from timelines must be promptly addressed to avoid penalties or potential setbacks in the process. Needless to state that several processes need to run in parallel in order to maintain strict timelines and schedules which include the following
Public Notices and Claim Verification processes - As part of the compliance requirements, insolvency professionals are mandated to issue public notices within specified timelines to inform all creditors about the initiation of insolvency proceedings. This step allows creditors sufficient time to submit their claims. Claims submitted by creditors undergo thorough verification by the IP, ensuring accuracy, validity, and priority as per the Code’s provisions. Verified claims must be documented and shared with the CoC and Adjudicating Authority for transparency.
Committee of Creditors (CoC) processes - The CoC plays a central role in the insolvency resolution process, and its compliance requirements are stringent. Insolvency professionals must ensure timely issuance of meeting notices to CoC members, along with sharing detailed agendas in advance. Resolutions and decisions taken during CoC meetings must be accurately recorded in the minutes. Voting mechanisms must comply with legal thresholds, such as the requirement of a 66% majority for crucial decisions, to ensure procedural integrity.
Asset Valuation and Liquidation processes - Valuation of the debtor’s assets is another critical compliance area. Registered valuers, as per the IBBI regulations, must determine fair and liquidation values of assets to aid decision-making during the resolution or liquidation process. If no resolution plan is approved, the insolvency professional must file for liquidation, ensuring strict adherence to the liquidation regulations. The sale of assets during liquidation must comply with transparent bidding procedures and proper documentation.
Stakeholder Communication and Regulatory processes - Maintaining open communication with creditors, regulators, and other stakeholders like Prospective Resolution Applicant or Interested Buyer in Liquidation is vital. Regular updates on key developments ensure transparency and foster accountability. Furthermore, compliance with orders or directives issued by the Adjudicating Authority, such as the NCLT or appellate bodies, must be prompt and precise. The implementation of approved resolution plans must also be monitored to ensure adherence to the specified terms and timelines. Insolvency and Bankruptcy Board of India (IBBI) plays a pivotal role in monitoring the conduct of insolvency professionals. IPs are required to submit compliance certificates, audit reports, and disclosures to the IBBI to demonstrate adherence to professional standards, regulations, and the provisions of the Code. This regulatory oversight ensures that the insolvency process remains transparent, fair, and aligned with legal requirements.
AI agents designed for managing the insolvency process would serve as an intelligent assistant, streamlining various stages of the resolution and liquidation processes while ensuring efficiency and compliance. This agent could integrate advanced features such as natural language processing (NLP) for analysing legal documents, predictive analytics for forecasting recovery outcomes, and automated workflows to manage tasks like claim verification, asset valuation, and resolution plan assessment. By incorporating real-time compliance monitoring, the AI agent could track filing deadlines, regulatory updates, and mandatory communications with bodies like the Insolvency and Bankruptcy Board of India (IBBI). It could also automate the creation and summarization of key documents, including Information Memorandum, transaction audit reports, and creditor meeting minutes, ensuring accuracy and adherence to timelines. With its ability to provide stakeholders with real-time notifications, alerts, and insights into key milestones, the agent would reduce the risk of human error, mitigate legal risks, and improve decision-making. Additionally, its integration with legal databases and valuation models would empower insolvency professionals to make data-driven decisions, manage cases efficiently, and enhance transparency throughout the insolvency process.