IBBI Digital Forms for Streamlining the IBC Liquidation Process
On 28th June 2024, the Insolvency and Bankruptcy Board of India (IBBI) published a circular regarding the use of IBBI digital forms for monitoring liquidation procedures under the Insolvency and Bankruptcy Code, 2016 (IBC) and the regulations framed thereunder.
The liquidation process under the IBC involves several crucial steps, from inviting claims from stakeholders to distributing realized proceeds as per the waterfall mechanism. This process, managed by the Insolvency Professional (‘IP’) functioning as a liquidator, requires meticulous compliance with legal requirements and reporting to the Adjudicating Authority (AA) and IBBI.
Earlier, IPs have submitted details regarding the liquidation process through emails, which is time-consuming and inefficient. To address this, the IBBI has developed a set of electronic forms that promise to enhance the efficiency and transparency of the liquidation process.
Key Steps in the IBC Liquidation Process
Inviting Claims from Stakeholders
- The liquidator collects claims from various stakeholders to form a liquidation estate.
Selling Assets under Stakeholders’ Consultation Committee (SCC)
- In consultation with the SCC, the liquidator endeavors to sell the corporate debtor’s assets efficiently.
Distributing Proceeds Using the Waterfall Mechanism IBC
- Proceeds are distributed to stakeholders following the priorities established under Section 53 of the IBC.
Role of the Insolvency Professional in Liquidator Compliance under IBC
The IP, serving as a liquidator, must ensure legal compliance, maintain accurate documentation, and report to the AA and the Insolvency and Bankruptcy Board. These responsibilities traditionally involved submitting detailed reports via email.
Introduction of Electronic Forms for Filing Liquidation Forms
To ease the compliance burden on IPs, the IBBI has introduced a set of electronic forms. These forms are designed to:
Enhancing Efficiency and Accuracy
- Allow IPs to submit forms online quickly, reducing delays.
- Minimize errors and ensure more reliable information.
Facilitating Systematic Record-Keeping
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Enable transparent record-keeping and seamless reporting throughout the liquidation process.
Accessing and Submitting IBBI Digital Forms
The forms are hosted on the IBBI website https://www.ibbi.gov.in and can be accessed with a unique username and password provided by the IBBI. The IP must upload and submit the forms, along with relevant information and records, after affixing a Digital Signature Certificate (DSC) or e-signing.
Overview of Specific Electronic Forms (LIQ 1 to LIQ 4)
The electronic forms cover various stages of the liquidation process:
| Form No. | Period Covered and Scope | Timeline of submission | |
| Generic Timeline | Specific Timeline | ||
| LIQ 1 | From Commencement of Liquidation till Public Announcement: Details of the Liquidator, Corporate Debtor (CD), and the liquidator’s fee | On or before the 10th day of the subsequent month, after a public announcement has been made |
For ongoing Cases, the form must be filed by September 30, 2024 (for March 24 quarter). Cases with Filed Applications, the form must be filed by September 30, 2024 (for the last quarter of the process) For closed Cases, the form must be filled by September 30, 2024 (for the last quarter of the process) |
| LIQ 2 | From Public Announcement till Progress Report: Details of valuation, sale, litigations, PUFE, SCC meetings, Receipts, and Payments | On or before the 10th day of the subsequent month, after submission of the Progress report to the AA | |
| LIQ 3 | From last Progress Report to Application for Dissolution: Details of unclaimed proceeds, sale, litigations, PUFE, Realisation, distribution of proceeds, Receipts, and Payments | On or before the 10th day of the subsequent month, after submission of the Dissolution/closure application to the AA |
For cases with Filed Applications, the form must be filed by September 30, 2024 (for the last quarter of the process) For closed cases, the form must be filled by September 30, 2024 (for the last quarter of the process) |
| LIQ 4 | From Application for Dissolution to Order for Dissolution: Details of distribution of proceeds, Receipts, and Payments | On or before 14 days of passing the order for dissolution of corporate debtor or closure of the liquidation process by the AA | For closed Cases, the form must be filled by September 30, 2024 (for the last quarter of the process) |
Consequences of Non-Compliance with Filing Liquidation Forms
Failure to comply with IBBI digital forms submission may attract penalties. IPs may be held liable for:
- Not filing forms with relevant information and records.
- Submitting inaccurate or incomplete information.
Source and References
- Insolvency and Bankruptcy Board of India, Circular No. IBBI/LIQ/73/2024 dated 28th June 2024.
- Full circular available at: IBBI Circular PDF