Information Memorandums and Data Rooms

1. PRESENTATIONBY:
RiyaManuja
RELEVANCYOFINFORMATION
MEMORANDUMSANDDATA
ROOMS
Importance, usage,
challenges and a
comparative study

2. FIRSTUP
CONSULTANTS
INTRODUCTION TO
THE TWO
CONCEPTS
Insight to their
independent and
mutual usage
2 2

3. FIRSTUP
CONSULTANTS
INFORMATION
MEMORANDUMS
Usage, relevance and
requirement
3

4. FIRSTUP
CONSULTANTS
INFORMATION MEMORANDUM
Explanation.—For the purposes of this section, “relevant information” means the information required by the
resolution applicant to make the resolution plan for the corporate debtor, which shall include the financial
position of the corporate debtor, all information related to disputes by or against the corporate debtor and any
other matter pertaining to the corporate debtor as may be specified.”
Section 29: Preparation of information memorandum:
• “29. (1) The resolution professional shall prepare an information memorandum in such form
and manner containing such relevant information as may be specified by the Board
for formulating a resolution plan.
• (2) The resolution professional shall provide to the resolution applicant access to all relevant
information in physical and electronic form, provided such resolution applicant undertakes—
• (a) to comply with provisions of law for the time being in force relating to confidentiality and
insider trading;
• (b) to protect any intellectual property of the corporate debtor it may have access to; and
• (c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-
section are complied with.
4
The Insolvency
and Bankruptcy
Code, 2016
PART II
Insolvency
Resolution and
Liquidation for
Corporate
Persons
CHAPTER II
Corporate
Insolvency
Resolution
Process(CIRP)
Section 29:
Preparation of
information
memorandum

5. FIRSTUP
CONSULTANTS 5
Relevancy of Information Memorandum:
• Reflects the current state and affairs of the company to the resolution applicant and the creditors of the
company;
• Facilitates the resolution applicant to make the resolution plan for the corporate debtor;
• Incorporates details with respect to assets & liabilities, latest annual financial statements, list of creditors
and particulars of debts due to or from the debtors and details of guarantees given in relation to debt.
Submission of information memorandum to each member of CoC
• Information memorandum to be submitted to each member of CoC within 2 weeks of appointment of RP
but not later than 54th day of commencement of insolvency;
• Details from information memorandum is utilized by prospective resolution applicants for formulating a
resolution plan;
• RP shall provide to the resolution applicant access to all relevant information in physical and electronic
form.
Information memorandum is prepared by the resolution professional to give an opportunity to any resolution
applicant to submit resolution plan for Revival and reconstruction of Corporate debtor to avoid any future
insolvency and liquidation situations.
Purpose
The primary purpose of a memo “for decision” is to support decision making – and also to “help (or sometimes
influence) a decision-maker to make a better decision in a particular problem situation than he might otherwise
have made without the analysis”. Other purposes that the briefing note can serve include: conveying
information; informing decisions, making a request, providing a response to a question, making a suggestion,
presenting an informal report, proposing a solution to a problem, or documenting a reference for future use.
Relevancy and
Purpose

6. FIRSTUP
CONSULTANTS 6
Contents of Information Memorandum
(2) The information memorandum shall contain the following details of the corporate debtor-
(a) assets and liabilities with such description, as on the insolvency commencement date, as are generally
necessary for ascertaining their values. Explanation: ‘Description’ includes the details such as date of acquisition,
cost of acquisition, remaining useful life, identification number, depreciation charged, book value, and any other
relevant details.
(b) the latest annual financial statements;
(c) audited financial statements of the corporate debtor for the last two financial years and provisional financial
statements for the current financial year made up to a date not earlier than fourteen days from the date of the
application;
(d) a list of creditors containing the names of creditors, the amounts claimed by them, the amount of their claims
admitted and the security interest, if any, in respect of such claims;
(e) particulars of a debt due from or to the corporate debtor with respect to related parties;
(f) details of guarantees that have been given in relation to the debts of the corporate debtor by other persons,
specifying which of the guarantors is a related party;
(g) the names and addresses of the members or partners holding at least one per cent stake in the corporate debtor
along with the size of stake;
(h) details of all material litigation and an ongoing investigation or proceeding initiated by Government and
statutory authorities;
(i) the number of workers and employees and liabilities of the corporate debtor towards them;
(j) Omitted
(k) Omitted
(l) other information, which the resolution professional deems relevant to the committee.
Regulation 36
INSOLVENCY
AND
BANKRUPTCY
BOARD OF
INDIA
(INSOLVENCY
RESOLUTION
PROCESS FOR
CORPORATE
PERSONS)
REGULATIONS,
2016
[AMENDED
UPTO
12.02.2020]

7. FIRSTUP
CONSULTANTS 7
Structure
As the communication mechanism of the policy analysis process, the briefing note should provide a
coherent synopsis of a policy problem, identify different policy options for addressing the problem,
articulate opposing perspectives and advocate a recommended option.
The typical structure for a briefing note includes a description of the proposed policy; relevant
background information; a discussion of key considerations (including implementation concerns,
financial considerations, stakeholder impacts, and possible unanticipated consequences), a summary
of arguments for and against the policy and a recommended decision
Quality Criteria
There is no universal standard for a briefing note, but it is generally understood to be a
concise, coherent summary of a public policy problem with a clearly articulated logic for
following a recommended course of action.
Structure &
Quality Criteria

8. FIRSTUP
CONSULTANTS
DATAROOMS
Usage, relevance and
requirement
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9. FIRSTUP
CONSULTANTS
DATA ROOMS
VDRs are used by companies to securely store and share critical and sensitive corporate
data and are most commonly used during deals. The information stored in a data room is
generally private documentation that is typically considered to be of high value to the
company or owner of the data room. Of course, in addition to traditional record keeping
that is required for many financial, legal, and tax matters, a lot of companies have other
important documents and information that they need to retain and would like to store safely
to ensure that it remains confidential. For example, items relating to intellectual property,
such as trade secrets and copyrighted works must be convenient to access but also stored in
a highly secure location. Because of the growing importance of data and the ensuing
increased demand to ensure that such data is adequately safeguarded, the virtual data room
was born, and over the years, it has evolved into the kind of solution that it is today.
9
Introduction

10. FIRSTUP
CONSULTANTS 10
When it comes to business, the borders between countries tend to blur: contracts and transactions are
being executed on the cross-national level and the involvement of several international players in one
deal is rather a rule than an exception.
In such conditions, an uninterrupted flow of communication becomes crucial: the partakers of the
project need to stay in touch while the deal is in progress. The easiest, the most efficient and secure
way to do it is to open a virtual data room. The latter simplifies sharing data online and allows deal-
makers to keep an eye on the project even when they are far away from their partners.
As it is hard to deny the convenience of a data room, more and more companies voice their intentions
to open the one. The popularity of virtual data rooms grows and the market expands: every
corporation, law firm, small entrepreneur, and even a private client have a chance to find a room that
would perfectly suit the financial abilities of the customer and their requirements and expectations.
But it might be pretty challenging to select the ideal platform: dozens of vendors might seem to be
identical, from the first sight.
INTRODUCTION & RELEVANCY

11. FIRSTUP
CONSULTANTS 11
As the name suggests, a virtual data room, or as it is more frequently called, a “VDR,” is an online
database in which companies can store and share confidential information, usually used during a
financial transaction. It may also be described as a type of electronic repository or document filing
system. With the ubiquitous reliance on computers and specialized software to keep a business
running smoothly, coupled with the fact that more and more companies are making the transition
to a completely paperless office, many of the previously document-heavy operational practices
have been shifted to the virtual realm.
VDRs are used by companies to securely store and share critical and sensitive corporate data and
are most commonly used during deals. The information stored in a data room is generally private
documentation that is typically considered to be of high value to the company or owner of the data
room. Of course, in addition to traditional record keeping that is required for many financial,
legal, and tax matters, a lot of companies have other important documents and information that
they need to retain and would like to store safely to ensure that it remains confidential. For
example, items relating to intellectual property, such as trade secrets and copyrighted works must
be convenient to access but also stored in a highly secure location. Because of the growing
importance of data and the ensuing increased demand to ensure that such data is adequately
safeguarded, the virtual data room was born, and over the years, it has evolved into the kind of
solution that it is today.
Online
repository with
robust features;
tends to ease the
busine0ss by
breaking
barriers

12. FIRSTUP
CONSULTANTS
ACOMPARATIVE
ANALYSIS
Issues that occur in
preparation of IMs and
setting up of VDRs
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13. FIRSTUP
CONSULTANTS
ISSUES FACED IN PREPARATION OF IM’SAND VDR’S
INFORMATION MEMORANDUM
Time factor- Information memorandum has to be
submitted within the restricted time frame of 14 days
of RP’s appointment but not later than fifty-fourth day
from the commencement date of CIRP, whichever is
earlier. It therefore becomes difficult at times to gather
the huge amount of information that is required.
Access to information-All the documents required for
preparation of information memorandum is not
publicly available and in some cases the corporate
debtor may not be willing to share all information.
Non-Cooperation from Corporate Debtor and its
staff- KMPs or employees of the corporate debtor
don’t cooperate properly with RP by not providing the
requisite data, documents and information;
This impairs the possibility of effective resolution of
the corporate debtor
DATAROOMS
Costly- Virtual data rooms are really pricey. Well,
largely because it’s a tangible and priceless investment
for a business to thrive and expand in a highly digital
space.
Lack of Security- There are different security needs
or requirements for every type of data and industry.
Very few virtual data rooms are able to comply with IT
security standards for handling legal and financial
data. In additions, these VDRs also do not have data
retention and uptime requirements needed for certain
records.
Too Speedy To Understand- Some people would
have that habit of skimming documents without really
reading it thoroughly and then signing it. Speed might
be one of the benefits or advantages of using VDRs
but this has proven to also work against many CEOs or
businesses. There are times that buyers or investors
would complain about the terms they have agreed to so
it would still be advisable to print legal documents and
forms to read them before you sign anything. 13
IMs
VDRs

14. FIRSTUP
CONSULTANTS
ISSUES FACED IN PREPARATION OF IM’SAND VDR’S
INFORMATION MEMORANDUM
Difficulty in compilation of data- It is a challenging
task to collate information of all assets of the company
located across the nation within the time frame having
regard to complexity and scale of operations of
business of corporate debtor.
DATAROOMS
Data Breaches in Due Diligence- Cyber attacks are
very common. Most businesses fall prey to
cybercriminals who could get unauthorized access to
your sensitive files with a VDR. The VDR then
becomes the point of entry and becomes a risk in
cybersecurity.
Due Diligence Risks- With a due diligence process,
your data is exposed to different people or users. This
company information is at risk of hacking. This could
involve eyeing into your business strategy or your
business’ intellectual property. These are very valuable
information especially for competitors. When exposed
to the wrong people, this can be at risk for social
engineering and phishing attacks.
Risk assessment is important before and even after the
completion of a deal or merger. Security reviews
should always be conducted during the period of due
diligence or transition so that problems would be
resolved as soon as possible. Monitoring of
vulnerabilities should also be increased to alert you of
any suspicious or unauthorized activity.
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15. FIRSTUP
CONSULTANTS
RELEVANCY IN THE
CURRENT GLOBAL
STATUS
COVID-19 global
outbreak
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16. FIRSTUP
CONSULTANTS
In the current time of COVID-19 global outbreak:
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• Data Rooms play a vital role in breaking borders in
cross-borders transactions by enabling an uninterrupted
flow of information and by facilitating contracts and
transactions that are being executed on the cross-
national level where the involvement of several
international players in one deal is rather a rule than an
exception.
• And for an ongoing transaction, a well exhaustive
Company document like the Information
Memorandum; serves many purposes at once by
reflecting the current state and affairs of the company to
the resolution applicant and the creditors of the
company; by facilitating the resolution applicant to
make the resolution plan for the corporate debtor and by
incorporating details with respect to assets & liabilities,
latest annual financial statements, list of creditors and
particulars of debts due to or from the debtors and
details of guarantees given in relation to debt.

17. FIRSTUP
CONSULTANTS
CONCLUSION
As much as the challenges occur,
Information Memorandums and
Virtual Data Rooms are critical
components of IBC proceedings and
otherwise.
The relevancy outshines the risks
and cons of their usage.
Its hard to deny their convenience,
articulated and organized outcomes
and an evolved solution brought by
the two components for the
knowledge world like today.
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18. THANK YOU
Riya Manuja +91 9315206178
manuja.riya17@gmail.comp
https://paperbackandink.wordpress.com/
author/riyamanuja/
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