Information Memorandum, Expression of Interest, Request for Resolution Plans under Insolvency and Bankruptcy Code 2016 (IBC)

CIRP
CIRP and Resolution Plan

Information Memorandum, Expression of Interest, Request for Resolution Plans & Resolution Plans

I. Information Memorandum

1. Preparation of Information Memorandum [Sec. 29 & CIRP Reg.-36]

The resolution professional shall prepare an information memorandum for formulating a resolution plan and submit in electronic form to each member of the committee within two weeks of his appointment, but not later than fifty-fourth day from the insolvency commencement date, whichever is earlier. 

Information memorandum means a memorandum prepared by resolution professional under sub-section (1) of section 29. [Sec. 5(10)].

2. Content of a Information Memorandum [CIRP Reg.-36(2) & (3)]

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) other information, which the resolution professional deems relevant to the committee.

A member of the committee may request the resolution professional for further information of the nature described in this Regulation and the resolution professional shall provide such information to all members within reasonable time if such information has a bearing on the resolution plan.

 

3. Share and access to Resolution Applicant[ Sec. 29(2) & CIRP Reg.-36(4)]

The resolution professional shall share the information memorandum after receiving an undertaking from a member of the committee to the effect that such member or resolution applicant shall maintain confidentiality of the information and shall not use such information to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of section 29.

As per Sec. 29(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.

Note:  “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.”

II. Invitation for Expression of Interest(EOI) [Reg.-36A]

 

1. Publish Invitation for Expression Of Interest(EOI)

  • The resolution professional shall publish brief particulars of the invitation for expression of interest in Form G of the Schedule at the earliest, not later than seventy-fifth day from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans.
  • The resolution professional shall publish Form G

(i) in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate debtor and any other location where in the opinion of the resolution professional, the corporate debtor conducts material business operations;

(ii) on the website, if any, of the corporate debtor;

(iii) on the website, if any, designated by the Board for the purpose; and

(iv) in any other manner as may be decided by the committee.

  • The Form G in the Schedule shall –

(a) state where the detailed invitation for expression of interest can be downloaded or obtained from, as the case may be; and

(b) provide the last date for submission of expression of interest which shall not be less than fifteen days from the date of issue of detailed invitation.

  • The detailed invitation referred above shall:

(a) specify the criteria for prospective resolution applicants, as approved by the committee in accordance with clause (h) of sub-section (2) of section 25;

(b) state the ineligibility norms under section 29A to the extent applicable for prospective resolution applicants;

(c) provide such basic information about the corporate debtor as may be required by a prospective resolution applicant for expression of interest; and

(d) not require payment of any fee or any non-refundable deposit for submission of expression of interest.

 

2. Submission of EOI

A prospective resolution applicant, who meets the requirements of the invitation for expression of interest, may submit expression of interest within the specified time. The expression of interest received after the specified time shall be rejected. An expression of interest shall be unconditional and be accompanied by-

(a) an undertaking by the prospective resolution applicant that it meets the criteria specified by the committee under clause (h) of sub-section (2) of section 25 and relevant records in evidence of meeting the criteria.

(b) an undertaking by the prospective resolution applicant that it does not suffer from any ineligibility under section 29A to the extent applicable and relevant information and records to enable an assessment of ineligibility.

(c) an undertaking by the prospective resolution applicant that it shall intimate the resolution professional forthwith if it becomes ineligible at any time during the corporate insolvency resolution process;

(d) an undertaking by the prospective resolution applicant that every information and records provided in expression of interest is true and correct and discovery of any false information or record at any time will render the applicant ineligible to submit resolution plan, forfeit any refundable deposit, and attract penal action under the Code; and

(e) an undertaking by the prospective resolution applicant to the effect that it shall maintain confidentiality of the information and shall not use such information to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of section 29.

Resolution plan submitted by a Resolution Applicant without EoI is against the provision of Sec. 65 of the Code – Armada Singapore Pte. Ltd. Vs.Ashapura Minechem Ltd – NCLAT

3. Due Diligence

The resolution professional shall conduct due diligence based on the material on record in order to satisfy that the prospective resolution applicant complies with-

(a) the provisions of clause (h) of sub-section (2) of section 25;

(b) the applicable provisions of section 29A, and

(c) other requirements, as specified in the invitation for expression of interest.

The resolution professional may seek any clarification or additional information or document from the prospective resolution applicant for conducting the due diligence.

 

4. Provisional List of eligible Prospective Resolution Applicants

  • The resolution professional shall issue a provisional list of eligible prospective resolution applicants within ten days of the last date for submission of expression of interest to the committee and to all prospective resolution applicants who submitted the expression of interest.
  • Any objection to inclusion or exclusion of a prospective resolution applicant in the provisional list may be made with supporting documents within five days from the date of issue of the provisional list. On considering the objections received the resolution professional shall issue the final list of prospective resolution applicants within ten days of the last date for receipt of objections, to the committee.

III. Request for Resolution Plans[Reg. 36B]

1. Issue Request for Resolution Plan

(1) The resolution professional shall issue the information memorandum, evaluation matrix and a request for resolution plans, within five days of the date of issue of the provisional list under Regulation 36A to:

(a) every prospective resolution applicant in the provisional list; and

(b) every prospective resolution applicant who has contested the decision of the resolution professional against its non-inclusion in the provisional list.

The request for resolution plans shall detail each step in the process, and the manner and purposes of interaction between the resolution professional and the prospective resolution applicant, along with corresponding timelines.

Evaluation matrix means such parameters to be applied and the manner of applying such parameters, as approved by the committee, for consideration of resolution plans for its approval[CIRP Reg.-2(1)(ha)]

2. Modification in Request for Resolution Plan

Any modification in the request for resolution plan or the evaluation matrix issued under sub-regulation (1), shall be deemed to be a fresh issue and shall be subject to timeline under sub-regulation (3) of regulation 36B.

If the evaluation criteria suggest that only top three Resolution Applicants should be negotiated, the Appellant who ranked 6th among the Resolution Applicants cannot have any right to participate for re-negotiation over the decision of the CoC-Kundan Care Products Ltd. vs Mr. Surya Kanta Satapathy & Ors. 47(IBC)47/2020 – NCLAT

3. Time limit to submit Resolution Plan

The request for resolution plans shall allow prospective resolution applicants a minimum of thirty days to submit the resolution plan(s). The resolution professional may, with the approval of the committee, extend the timeline for submission of resolution plans.

 

4. Re-issue Request for Resolution Plans

The resolution professional may, with the approval of the committee, re-issue request for resolution plans, if the resolution plans received in response to an earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the final list. Provided that provisions of sub-regulation (3) shall not apply for submission of resolution plans under this sub-regulation.

5. Non-Refundable Security

The request for resolution plans shall not require any non-refundable deposit for submission of or along with resolution plan. The request for resolution plans shall require the resolution applicant, in case its resolution plan is approved under sub-section (4) of section 30, to provide a performance security within the time specified therein and such performance security shall stand forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule.

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