ROLES AND RESPONSIBILITIES OF IBBI SFA VALUERS IN THE PPIRP FRAMEWORK: A COMPREHENSIVE OVERVIEW

The Pre-packaged Insolvency Resolution Process (PPIRP) and the roles of IBBI Securities or Financial Asset Valuers are governed by the Insolvency and Bankruptcy Code (IBC) and its associated regulations. Below are the legal provisions and sections relevant to the new roles introduced for IBBI Securities or Financial Asset Valuers after the introduction of PPIRP:

1. Appointment of Registered Valuers (Section 38):

Legal Provision: Section 38 of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

The resolution professional is required to appoint two registered valuers within three days of their appointment.

Prohibition on certain individuals/entities, including related parties, auditors of the corporate debtor, and relatives of the resolution professional, from being appointed as registered valuers.

2. Determination of Fair Value and Liquidation Value (Section 39):

Legal Provision: Section 39 of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

Registered valuers, including IBBI Securities or Financial Asset Valuers, are responsible for determining fair value and liquidation value after physical verification of inventory and fixed assets.

The average of values determined by the two registered valuers is considered as fair value or liquidation value.

3. Confidentiality of Valuation Information (Section 39):

Legal Provision: Section 39(2) of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

Valuers, including IBBI Securities or Financial Asset Valuers, must maintain confidentiality of fair value and liquidation value.

The resolution professional provides these values to the committee members in electronic form after receiving an undertaking for confidentiality.

4. Information Memorandum Preparation (Section 40):

Legal Provision: Section 40 of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

While not explicitly stated, IBBI Securities or Financial Asset Valuers may contribute relevant information for the information memorandum, particularly regarding assets, liabilities, and financial details.

5. Review of Preferential and Other Transactions (Section 41):

Legal Provision: Section 41 of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

The resolution professional, which may involve IBBI Securities or Financial Asset Valuers, forms an opinion on whether the corporate debtor has been subjected to transactions covered under specific sections.

If such transactions are identified, the resolution professional applies to the Adjudicating Authority for appropriate relief.

6. Timelines for Determination of Transactions (Section 41):

Legal Provision: Section 41(1) and (2) of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

The resolution professional, which could include IBBI Securities or Financial Asset Valuers, is required to form an opinion on such transactions on or before the thirtieth day and make a determination on or before the forty-fifth day of the PPIRP commencement date.

7. Application to Adjudicating Authority (Section 41):

Legal Provision: Section 41(3) of the IBC

Roles for IBBI Securities or Financial Asset Valuers:

If transactions covered under sections 43, 45, 50, or 66 are identified, the resolution professional, potentially involving IBBI Securities or Financial Asset Valuers, applies to the Adjudicating Authority for appropriate relief on or before the sixtieth day of the PPIRP commencement date.

In addition to the responsibilities listed above, IBBI Securities and Financial Asset Valuers also carry out some other duties.

50. Valuation for Base Resolution Plan: IBBI SFA Valuers may play a crucial role in assisting corporate debtors in preparing the Base Resolution Plan. This involves valuing the assets, liabilities, and overall financial position of the company, providing essential information for the initiation of the PPIRP.
50. Evaluation of Resolution Plans: As per the PPIRP framework, the Committee of Creditors (CoC) may approve the Base Resolution Plan or invite resolution applicants to submit alternative plans. IBBI SFA Valuers could be engaged in evaluating these plans, ensuring that they meet the requirements specified in section 54K and Regulation 45 of IBBI (PPIRP) Regulations, 2021.
50. Scoring and Improvement Process: The Swiss challenge method introduced in PPIRP involves scoring and improving resolution plans submitted by different applicants. IBBI SFA Valuers may be involved in assessing the plans based on predetermined criteria and providing input for the improvement process as outlined in Regulation 48 of IBBI (PPIRP) Regulations, 2021.
50. Performance Security: IBBI SFA Valuers may be required to assess and determine the adequacy of the performance security provided by resolution applicants, as mandated by the PPIRP regulations.
50. Valuation of Claims: In the PPIRP process, the corporate debtor is required to submit a list of claims under section 54G. IBBI SFA Valuers may be engaged in valuing these claims to facilitate the resolution process.
50. Adjudicating Authority Proceedings: IBBI SFA Valuers may be involved in proceedings before the Adjudicating Authority (AA), providing expert opinions or valuation reports as necessary during the admission or rejection of the PPIRP application, and subsequently during the approval of the resolution plan.
50. CIRP Termination Assessment: In cases where the PPIRP is terminated and the corporate debtor becomes eligible for Corporate Insolvency Resolution Process (CIRP), IBBI SFA Valuers may play a role in assessing the valuation aspects related to the transition.

 

It's important to note that the roles of IBBI Securities or Financial Asset Valuers may not be explicitly detailed in the legal provisions but are inferred based on their general responsibilities in valuation processes and compliance with the Insolvency and Bankruptcy Code and associated regulations. The specific guidelines and standards set by the Insolvency and Bankruptcy Board of India (IBBI) may further define the roles and responsibilities of registered valuers, including IBBI Securities or Financial Asset Valuers, in the context of PPIRP.

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Article Compiled by:-

Mayank Garg

(LegalMantra.net Team)

+91 9582627751

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.

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