The Insolvency and Bankruptcy Board of India ( IBBI ) directed the liquidators to make certain declaration when financial service provider undergoes voluntary liquidation.
The IBC provides for the voluntary liquidation process of corporate persons. However, the definition of ‘corporate person’ in sub-section (7) of section 3 excludes any financial service provider ( FSP ). Section 227 read with the Insolvency and Bankruptcy ( Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority ) Rules, 2019 allows FSPs who have been notified by the Central Government, after consulting financial regulators, to undergo a voluntary liquidation process after obtaining prior permission of the appropriate regulator.
It has been noted by the Board that some FSPs have commenced the voluntary liquidation process without notification and / or prior permission of the appropriate financial regulator.
Accordingly, the circular directed that the liquidator shall ensure that, if the corporate person falls under the category of financial service provider, it shall declare that: (i) the category of Financial Service Providers has been notified by the Central Government under section 227 of the Code, and (ii) the corporate person has obtained prior permission from the appropriate regulator.
“It is hereby directed that the liquidator shall submit a copy of Form H and the final report filed before the Adjudicating Authority as per Regulation 38, and the order for dissolution to the Board to the email ID: liqvol@ibbi.gov.in. This is issued in the exercise of the powers conferred under section 196 of the Insolvency and Bankruptcy Code, 2016” the Circular noted.
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