1) Interim Financiers to get some visibility; 2) Dissenting FCs get priority in staggered payments; 3) Asset wise resolution also; and more (1)

Legal Updates
May 30, 2025

Home - 1) Interim Financiers to get some visibility; 2) Dissenting FCs get priority in staggered payments; 3) Asset wise resolution also; and more (1)

Brief Overview:

Through small tweaks, few significant amendments to the CIRP Process:

1) Resolution plans providing for payment in installments must provide for pro rata and priority payment for each installment to dissenting financial creditors.

2) Expression of Interest can provide for resolution of the corporate debtor as a whole or for sale of one or more assets or both approaches also.

3) Providers of interim finance entitled to attend the meetings of the Committee of Creditors (“CoC”) as observers without voting rights.

4) Non-compliant resolution plans also to be submitted to the CoC.

Technical Details:

The Insolvency and Bankruptcy Board of India has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025 with effect from 26^th May 2025.

1) Providing priority and pro rata payment to dissenting financial creditors in case of staggered payments has been inserted as part of the mandatory contents of the resolution plan.

2) Resolution plans for the corporate debtor as a whole or asset-wise or both can be invited with the approval of the CoC. Prior to the amendment, such plans could be invited only upon failure to receive a resolution plan for the corporate debtor as a whole. This pre-condition has now been dropped.

3) Interim Financiers can attend CoC meetings as directed and decided by the CoC.

4) Details of non-compliant plans shall be submitted by the resolution professional, however, the CoC to evaluate only those plans which are compliant with the law and evaluation matrix.

JC Takeaway:

1) Giving Interim Financiers an observer’s seat may not suffice. Given previous experiences, many such financiers may well insist on greater protection before agreeing to fund.

2) A small win for dissenting financial creditors and there are bigger issues to be still dealt with.

3) Enabling invitation for asset wise resolution plans and also for corporate debtors as a whole will result in complexities and require adept handling.

For further details, please see:

https://ibbi.gov.in/uploads/legalframwork/d6170ca9df92e50bfc5ff91e43e89c9f.pdf