The document summarizes key amendments made to the Insolvency and Bankruptcy Code (IBC) through an ordinance dated June 6, 2018. Some of the major changes include: 1) Home buyers are now classified as financial creditors. The resolution period can be extended by 66% voting share instead of 75%. Withdrawal of application is allowed before invitation of expression of interest but requires 90% voting share. 2) Only shareholders can initiate insolvency proceedings for corporates. Guarantors are not covered under moratorium and can be subjected to IBC separately. There is clarity on various voting requirements and timelines. 3) Promoters of MSMEs can bid if they

1. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
amendments TO IBC VIDE
INSOLVENCY & BANKRUPTCY
(AMENDMENT) ORDINANCE
DATED 6TH
JUNE,2018
IBC, 2016

2. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
SECTION WISE AMENDMENTS AND ITS IMPLICATIONS:
Sr. No Amendments Implications
A Home Buyer as FC
The Ordinance has clarified that an allottee in a real estate
project shall be a financial creditor. (An explanation has been
inserted under Section 5 (8) (f) to clarify that home allottees under
the real estate project shall be deemed to be a commercial
borrowing)
Home allottees under a real estate project
are now "financial creditors"
B Application by Corporate Debtor
The Ordinance has amended Section 10(3) of the Code to provide
that the Corporate Debtor can make an application under IBC only
if a Special Resolution in shareholders meeting is passed
The amendment makes it difficult for
corporates to file an application especially
in case of listed companies. This removes
the powers of the Board of Directors and
shifts it to the Shareholders. Amendment
has been made as instances of abuse were
reported by financial creditors
C Extension of Resolution Period
The ordinance has amended Section 12(2) of the Code to provide
that the extension of resolution period shall need 66% of voting
share instead of 75% voting share
It would be easier to pass the resolution
D Withdrawal of application
The ordinance has now inserted new Section 12A which
allows withdrawal of application after admission, in the manner
as may be prescribed. A press release of Government states that
such withdrawal will only be permissible before publication of
notice inviting expression of interest. In this matter, the
Adjudicating Authority observed that expression of interest may
not be required.
The press release has complicated this
issue of withdrawal of application with
support of 90% voting share as the window
period provided for withdrawal of
application is extremely small
IBC, 2016

3. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
E Guarantors of corporate debtors under CIRP exposed to
IBC
The Ordinance has substituted Section 14(3) to clarify that
guarantors are not covered by the moratorium provided under
Section 14. Consequently only corporate debtor under CIRP is
covered by the moratorium
The amendment clears the air in view of
the conflicting judicial decisions and
upholds the NCLAT position in Vista
Steel case. The guarantors of Corporate
Debtors under CIRP can now be subjected
to IBC by filing separate application with
NCLT
F Claim Submission Date
Section 15(1)(c) of the Code earlier required that the public
announcement inviting claims shall contain the last date for
submission of claims. Regulation 12 of the IBBI (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016
provides that a creditor can submit the proof of claim even after
the stipulated date mentioned in the public announcement till the
approval of a resolution plan by the CoC. The Adjudicating
Authority in a matter held that regulation comes in direct conflict
with the provisions of section 15(1)(c) of the Code. Section
15(1)(c) of the Code, as modified by the Ordinance, requires that
the public announcement inviting claims shall contain the last
date for submission of claims as may be specified.
The ambiguity with respect to the last
date of submission of claims is sought to
be removed
G Term of IRP
Section 16 (5) of the Code earlier provided that the term of IRP
shall not exceed 30 days from date of his appointment. As
modified by the Ordinance, this section now provides that the
terms of the IRP shall continue till the date of the appointment
of the RP under section 22.
The ambiguity with respect to the period
from end of the IRP term (30 days) to the
date of appointment of Regular RP is now
removed and the IRP tenure continues.
However, the RPs role during this period
is yet to be specified especially with
respect to appointment of valuers, IM etc
H Compliance with laws
Section 17 as amended makes an IP responsible for complying
with requirements of under any law on behalf of the corporate
debtor.
The ambiguity in respect of compliance
of law during the CIRP has been
removed
IBC, 2016

4. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
I Class of Creditors
Section 21 (6A) (b) now inserted provides that where a financial
debt is owed to a class of creditors exceeding number as may be
specified, the IRP shall make an application to the Adjudicating
Authority along with the list of all financial creditors, containing
the name of an insolvency professional, other than the interim
resolution professional, to act as their authorised representative
who shall be appointed by the Adjudicating Authority prior to
the first meeting of the committee of creditors. Further Section
21 (6B) (ii) provides that that the remuneration payable to this
authorised representative shall be as specified,which shall be
jointly borne by the financial creditors.
This provision is in respect of home
allottees who are more than the specified
number requiring them to appoint a IP as
an authorised representative. However,
the regulations in this respect are yet to be
made. The payment of the remuneration
by the home allottees to the authorised
representative remains a grey area.
J Manner of Voting for home allottees
The amended section 21(7) provides that the Board may specify
the manner of voting and determining the voting share in respect
of financial debts covered in subsection (6) and (6A).
The voting in respect of the home allottees
is to be specified by the regulations
K Voting by CoC
All decisions of the CoC with respect to routine matters would
need 51% of voting power. This would not cover specific matters
under Section 28 (Interim finance, etc) which will require 66%
of the voting power. Extension of CIRP period, Appointment of
RP, Approval of resolution plan would need 66% voting power
This would provide ease in conducting the
CIRP
L Term of RP
Section 23 has been amended to provide that the RP shall
continue even after the 180 days /270 days until the order is
passed under section 31 approving or rejecting the resolution
plan
The ambiguity with respect to this period
has been removed. However the
ambiguity in respect of the period from
the end of CIRP period (180/270days) to
obtaining the liquidation order still
remains
M Consent of IP
The Ordinance at several places requires written consent of IP in
specified form to act as RP.
This removes the ambiguity
IBC, 2016

5. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
IBC, 2016
N Exemption to pure financial creditors under section 29A
The existing Section 29(A) has been fine-tuned to exempt pure
financial entities from being disqualified on account of NPA
Financial entitites who are investors in
NPA accounts are not disqualified under
Section 29 (A)
O Primary onus on resolution applicant to certify its eligibility
under section 29A
The Ordinance provides that the Resolution Applicant shall
submit an affidavit certifying its eligibility to bid
Primary responsibility has been placed on
RA however, this does not take away the
responsibility of RP and the CoC to
conduct its own due diligence on the RA
P Limitation Act to apply to IBC
New section 238A has been inserted to provide that the
Limitation Act shall apply to all proceedings under the IBC.
This has removed the ambiguity on the
applicability of the Limitation Act.
Therefore, creditors with debts
outstanding for more than 3 years may not
be eligible.
Q Promoters of Corporate debtors under MSME category
eligible to bid
Promoters having NPA accounts of Corporate Debtors who are
MSME/or are guarantors of such account would be eligible to
bid as disqualification under clause (c) & (h) of Section 29A
shall not apply.
This would allow many MSMEs to get
rehabilitated. However the definition of
MSME makes the scope narrow and the
new definition of turnover of 250cr is yet
to be notified.

6. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
IBC, 2016
VOTING SHARE
REQUIRED FOR VARIOUS
MATTERS UNDER IBC,
2016

7. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
What would be the voting share for various matter under IBC, after the Ordinance 6th
June,
2018?
Sr. No Voting Share 66%
1 Sec. 12(2) Extension of CIRP period
2 Sec .22 (2) Appointment of RP
3 Sec. 27(2) Replacement of RP
Sec. 28 (1): All decisions under this section
4 (a) raise any interim finance in excess of the amount as may be decided by the
committee of creditors in their meeting;
5 (b) create any security interest over the assets of the corporate debtor;
6 ( c) change the capital structure of the corporate debtor, by way of issuance of
additional securities, creating a new class of securities or buying back or
redemption of issued securities in case the corporate debtor is a company;
7 (d) record any change in the ownership interest of the corporate debtor;
8 (e) instructions to financial institutions maintaining accounts of the corporate
debtor for a debit transaction from any such accounts in excess of the
amount as may be decided by the committee of creditors in their meeting
9 (f) undertake any related party transaction;
10 (g) amend any constitutional documents of the corporate debtor;
11 (h) delegate its authority to any other person;
12 (i) dispose of or permit the disposal of shares of any shareholder of the
corporate debtor or their nominees to third parties;
IBC, 2016

8. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates
13 (j) make any change in the management of the corporate debtor or its
subsidiary;
14 (k) transfer rights or financial debts or operational debts under material
contracts otherwise than in the ordinary course of business;
15 (l) make changes in the appointment or terms of contract of such personnel as
specified by the committee of creditors;
16 (m) make changes in the appointment or terms of contract of statutory auditors
or internal auditors of the corporate debtor.
17 Sec 30(4) CoC to approve the resolution plan
18 Sec. 33(2) Liquidation during CIRP but before approval of Resolution plan
Sr. No Voting Share 90%
1 Sec. 12A Withdrawal of application initiating the CIRP
Sr. No Voting Share 51%
1 All decisions of the Committee of Creditors required to be taken to keep the concern as going
concern other than those specifically mentioned
IBC, 2016

9. Alok K Saksena
Insolvency Resolution Professional
Desai Saksena & Associates