5th Amendments Procedural & disclosure in CIRP framework

Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025 – 5th Amendments Procedural & disclosure in CIRP framework

The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025 introduces important procedural and disclosure-related amendments to the CIRP framework under the IBC. These amendments Reinforce the importance of transparent disclosure in CIRP and Align with the objective of maximizing value and ensuring fairness in the insolvency resolution process. also Prevent the manipulation or last-minute assignment of avoidance/fraud claims so than enhance accountability of RP and CoC in properly managing and disclosing such transactions. Here’s a summary and analysis of the key changes:

1. Amendment to Regulation 36 – Contents of the Information Memorandum :

Sub-regulation (1): Insertion: The phrase “and its subsequent updates thereof” is added.  

Implication of IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025 which say that The Information Memorandum (IM) must now not only disclose details as on the insolvency commencement date but also include subsequent updates, ensuring dynamic and current disclosure to all stakeholders.

Sub-regulation (2) – New Clause (ha): A new clause (ha) is inserted: “Details of all identified avoidance transactions (under Chapter III) or fraudulent or wrongful trading (under Chapter VI of Part II of the Code) and subsequent filings before Adjudicating Authority as referred under regulation 35A(3A)”.

Implication IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025 which say that The IM must mandatorily include All identified avoidance transactions (e.g., preferential, undervalued, extortionate, fraudulent). & Details of wrongful/fraudulent trading. and Filings made under Regulation 35A(3A). This promotes transparency and ensures resolution applicants are fully informed before submitting a resolution plan.

2. Amendment to Regulation 38 – Mandatory Contents of Resolution Plan 

New Sub-regulation (2A): A resolution plan shall not provide for assignment of any avoidance or fraudulent/wrongful trading claims unless:

(a) They were disclosed in the Information Memorandum, and
(b) Intimated to all prospective resolution applicants under Regulation 35A(3A) before the last date for plan submission.

Proviso: This requirement does not apply to resolution plans already submitted to the Adjudicating Authority before the date of commencement of this Fifth Amendment.

Implication of IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025 which say that Prevents backdoor assignment of high-value or sensitive avoidance claims to third parties without proper disclosure to RAs. Ensures level playing field among all prospective resolution applicants  and Enhances procedural integrity and reduces post-approval disputes. These amendments shall come into force from the date of their publication in the Official Gazette.

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