Our Story

March – July 2014

Vidhi Origination

1. Concept Note (March - May 2014)

Soon after starting operations, we prepared a concept note that examined the reasons for failure of the Indian regime, evaluated
international best practices and suggested a combination of substantive and institutional reforms for making the system more
effective. We submitted our note to the Ministry of Finance in May 2014 and also met the concerned officials to explain the
importance of law reform in this area. Among other measures, we recommended (a) the establishment of a system of licensed
insolvency practitioners under an independent authority and (b) provisions for automatic liquidation if a debtor was not resolved
within a specified time-period. Today, these measures are recognized as two of the most important features of the new bankruptcy regime.

2. BRIEFING BOOK (July 2014)

In July 2014, we released a briefing-book at a public event, which made a case for insolvency law reform for both corporates and
individuals. While our entry on corporate insolvency reform reiterated some of our recommendations from the concept note, the
personal insolvency entry attempted to outline the limitations of the pre-independence laws and underscore the need for reform.
While several law reform committees had made a case for reforming the corporate insolvency regime in the recent past, personal
insolvency reform never received much attention before. Our briefing-book entry attempted to mainstream the issue.

August - October 2014

RBI Research Reports

RBI Research Reports (August – October 2014)

In August 2014, we were invited to the RBI headquarters in Mumbai by Dr Raghuram Rajan, the-then Governor to give us a
research mandate on writing reports on areas, including (a) Identifying solutions to the non-performing loans crisis in the Indian
banking sector and (b) Devising better legal mechanisms for identifying and disciplining willful defaulters. We submitted two reports
to the RBI in late 2014. Based on our recommendations, the RBI notified a ‘strategic debt restructuring scheme’ that allowed lenders
to take control of a defaulting company in certain situations. This scheme was seen as an important tool for resolution before the IBC
got enacted.

April 2015

NCLT Litigation

NCLT Litigation (April 2015)

The Ministry of Corporate Affairs (MCA) approached Vidhi for research assistance in relation to the writ petition before the Supreme
Court challenging the constitutionality of the provisions of the Companies Act 2013 operationalizing National Company Law Tribunal
(NCLT) and National Company Law Appellate Tribunal (NCLAT). Vidhi prepared a comprehensive report analyzing Chapter XXVII of
the Companies Act, 2013 in light of three landmark Supreme Court judgments in L Chandra Kumar v. Union of India, Union of India
v. R. Gandhi (NCLT case), and Madras Bar Association v. Union of India (National Tax Tribunal case). In this report, Vidhi also suggested
reforms to the Companies Act 2013 and prepared a litigation strategy for the MCA. Vidhi’s research was instrumental in distinguishing
the National Tax Tribunal from the NCLT, which paved the way for upholding the constitutional validity of the NCLT and its integration
into the IBC.

August 2014 - November 2015

Bankruptcy Law Reforms Committee

1. BLRC Interim Report (August 2014 - February 2015)

In August 2014, the Ministry of Finance constituted a reforms committee to examine India’s insolvency laws and suggest changes
for making the system effective. The Ministry appointed us to provide technical and drafting assistance to the committee. The
committee issued its interim report in February 2015. Although this report was set in the context of the insolvency law provisions
of the Companies Act, 2013, as mentioned in its introduction, it was intended to serve as an approach paper for the IBC. Among
other recommendations, the report identified amendments for operationalizing the NCLT, which had been embroiled in litigation
for several years. It also recommended how the Companies Act provisions on revival and rehabilitation should be streamlined for
developing an efficient bankruptcy process. Eventually, this provided an outline for designing the corporate insolvency resolution
process under the IBC. The report also recommended an out-of-court administrative restructuring mechanism for small and
medium enterprises, which was later recognized and implemented by the Reserve Bank of India (RBI) under its 2016 ‘Framework
for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs)’. In a recent IBC case (Mobilox), the Supreme Court
cited the Interim Report to explain the historical treatment of the term ‘disputed debt’ under the old insolvency regime to determine
the meaning of the term ‘dispute’ in the context of operational debt under the IBC.

2. BLRC Report (April - November 2015)

Between April, 2015 and August, 2015, Vidhi worked with a core group BLRC members for designing the IBC. In addition to shaping
some core features of the Code and its interaction with other legislation, Vidhi was instrumental in integrating the NCLTs into the IBC
process. We also wrote a research paper on liquidation, which influenced several features of the Code and has been cited in the final
report of the BLRC. Between September, 2015 and November, 2015, we assisted the BLRC in drafting the IBC. The final leg of the
drafting team’s work was carried out in Vidhi's offices in Delhi, under the guidance of the BLRC Chairman, Dr. T.K. Viswanathan.

November 2015 - May 2016

Enactment of the IBC

Assistance to the Ministry of Finance on the IBC (November 2015 - May 2016)

After the BLRC submitted its report, Vidhi worked closely with the Ministry of Finance for preparing the IBC Bill which got tabled in
the Lok Sabha in December 2015. Vidhi also advised the Ministry in drafting the Notes on Clauses (which have been relied upon in
several IBC cases, Swiss Ribbons, being the most important one). After the Bill got referred to the Joint Committee of the Parliament,
Vidhi continued to advise the Ministry until the finalization of the revised Bill and its enactment in May, 2016. Vidhi Fellows were also
called to formally depose before the Joint Committee.

Insolvency and Bankruptcy Code, 2016

Notes on clauses of IBC, 2015

June 2016 – June 2017

Implementation of the provisions of the IBC relating
to corporate insolvency and institutional infrastructure

1. IBC Implementation, Phase 1 (May - June 2016)

While the IBC was enacted under the aegis of the Ministry of Finance, it was transferred to the Ministry of Corporate Affairs for
implementation. We advised the MCA during this transition and conducted several information sessions for the MCA officials during
this period.

2. Assistance to Working Groups suggesting Rules and Regulations
(July – September, 2016)

Prior to the formation of the Insolvency and Bankruptcy Board of India (IBBI), the MCA set up Working Groups to recommend
subordinate legislation pertaining to insolvency professionals, insolvency professional agencies and the liquidation processes under
the Code. Vidhi was engaged by the MCA to assist the Working Groups in recommending the design of the subordination legislation.
Vidhi providing research assistance on the creation of an optimal framework, collated views of different stakeholders and the public,
and led the drafting of the Regulations recommended by the Working Group which were made public in October, 2016.

3. Assistance to IBBI and MCA on Rules and Regulations on IPs,
IPAs, Liquidation and CIRP (October – December, 2016)

After the Working Groups submitted their recommendations, Vidhi was appointed by the newly formed Insolvency and Bankruptcy
Board of India (‘IBBI’) to assist it in designing and drafting the subordinate legislation pertaining to insolvency professionals,
insolvency professional agencies and the corporate insolvency resolution & liquidation processes under the Code. Vidhi provided
IBBI and MCA research and drafting assistance, and led stakeholder consultations on the design of these Rules and Regulations.

4. Assistance to IBBI on Regulations on IUs and
Voluntary Liquidation (February- March, 2017)

After the implementation of the core areas of the corporate insolvency framework under the Code, Vidhi was appointed to assist the
IBBI in drafting the regulations pertaining to information utilities and voluntary liquidation which were notified in March 2017.

5. Assistance to IBBI on Regulations on Fast-track CIRP
and amendments to other Regulations (May- June 2017)

To finish the implementation of the corporate insolvency framework under the Code, Vidhi was appointed to assist the IBBI in drafting
the regulations pertaining to fast track insolvency and advise on amendments to other subordinate legislation, which were notified in
June 2017.

December 2016 &
March 2017

Support to the NCLT

NCLT Training (December, 2016 & March, 2017)

After the implementation of the IBC, Vidhi was invited to be a training resource for colloquiums held for the National Company Law
Tribunal judges in Delhi. Vidhi assisted the IICA and MCA in conceptualizing these colloquiums and was a speaker in sessions
pertaining to liquidation and personal insolvency provisions of the Code.

January 2018 - Present

Insolvency Law Committee and amendments to the Code

1. First Report of the Insolvency Law Committee
(January - March 2018)

Vidhi was appointed to assist the Insolvency Law Committee on suggesting amendments to the Code. The first report of the
Insolvency Law Committee (Committee) identified various issues arising from, and impacting the functioning of, corporate insolvency
and liquidation under the Code. Vidhi assisted the Committee by carrying out legal research on the principles involved, as well as
international practices, and by providing drafting assistance.

2. Drafting the Insolvency and Bankruptcy Code
(Second Amendment) Act, 2018 (June - August, 2018)

Vidhi advised the MCA on drafting the ordinance amending the Code based on the recommendations of the ILC. The ordinance
amending the Code was passed by Parliament as the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018.

3. Report on Cross-Border Insolvency of the
Insolvency Law Committee (June - October 2018)

Vidhi was appointed to assist the Insolvency Law Committee on suggesting a framework to deal with cross-border insolvency. A
draft part (to be inserted in the Code) dealing with cross-border insolvency of corporates was put up on the website of the MCA
inviting public comments.

Cross-Border Insolvency within the Insolvency & Bankruptcy Code, 2016

Following this, a Report on Cross Border Insolvency was released by the Insolvency Law Committee in October, 2018. Vidhi led the
process of the Committee by providing research assistance on international best practices, review of public comments and views
emanating from stakeholder consultations organised by the Insolvency and Bankruptcy Board of India and the MCA, and providing
drafting support for the Report.

4. Advising on the Bill amending the Code
(November - January, 2019)

Vidhi was appointed to advise the MCA on drafting the bill amending the Code based on the recommendations of the Insolvency
Law Committee on designing a cross-border framework.

July 2017 - Present

Rules and Regulations on Personal Insolvency

Implementation of the personal insolvency provisions under the Code
(July 2017 - Present)

Vidhi has been assisting the Insolvency and Bankruptcy Board of India and Working Groups constituted by it on implementing the
provisions relating to personal guarantors, partnership firms, proprietorship firms and individuals under the IBC. The implementation
of these provisions would put in place a framework to address the insolvencies of MSMEs which has been identified as an emerging area
of stress for bank balance sheets in submissions to the Parliamentary Estimates Committee.

Overview

The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies)
Regulations, 2016

The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 lay down the minimum eligibility requirements
and the process for registration of insolvency professional agencies. The Regulations also provide the conditions for surrender and cancellation of the
registration. Modelled on laws setting up professional self-regulating organisations both in India and in other jurisdictions (such as the UK on whose
Recognised Professional Bodies, IPAs were modelled), these Regulations provide the framework for the operationalization of the two-tier model of
“regulated self-regulation” for insolvency professionals.

Vidhi assisted the IBBI and the Working Group set up by the MCA in the design of these regulations by providing research assistance on the creation of
an optimal framework, collating views of different stakeholders, and by leading the drafting of these regulations.

Overview

The Insolvency and Bankruptcy Board of India (Model Bye Laws and Governing Board
of Insolvency Professional Agencies) Regulations, 2016

The Insolvency and Bankruptcy Board of India (Model Bye Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 provide
requirements for the composition of the Governing Board of insolvency professional agencies and minimum standards and requirements pertaining.

The BLRC envisaged that “The IP agencies under the Board will, within the regulatory framework defined, act as self-regulating professional bodies that
will focus on developing the IP profession for their role under the Code. They will induct IPs as their members, develop professional standards and code
of ethics under the Code, audit the functioning of their members, discipline them and take actions against them if necessary.” These Regulations provide
the regulatory framework within which insolvency professional agencies may discharge the functions envisaged for them under the Code.

Vidhi assisted the IBBI and the Working Group set up by the MCA in the design of these regulations by providing research assistance on the creation of
an optimal framework, collating views of different stakeholders, and by leading the drafting of these regulations.

Overview

The Insolvency and Bankruptcy Board of India (Insolvency Professionals)
Regulations, 2016

The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 lay down the minimum eligibility, qualification and
experience requirements for registration of insolvency professionals. These Regulations also lay down a Code of Conduct that all insolvency professionals must abide by.

The insolvency professional, broadly, coordinates the processes under the Code. At the time the Code was being implemented, India did not have a pre-existing profession of insolvency practitioners. Accordingly, these Regulations carried out the dual purpose of incentivizing the creation of the insolvency profession in India while ensuring that persons of the highest integrity and qualification become insolvency professionals.

Vidhi assisted the IBBI and the Working Group set up by the MCA in the design of these regulations by providing research assistance on the creation of an optimal framework, collating views of different stakeholders, and by leading the drafting of these regulations.

Overview

The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provide requirements for the conduct of the insolvency resolution process for corporate persons under the Code.

The insolvency resolution process for corporate persons provides a framework within which the committee of creditors comprising of the financial creditors of the corporate debtor can assess the viability of the debtor and choose a plan for the resolution of its distress. To facilitate this, in this period the resolution professional keeps the corporate debtor running as a going concern and the creditors of the corporate debtor are constrained from enforcing their debt.

The Rules and Regulations pertaining to the corporate insolvency resolution process clearly define the process of admission, the role and duties of the insolvency professional and the manner in which the committee of creditors is to discharge its duties. These are defined to ensure process certainty while maintaining malleability in the law.

Vidhi advised the IBBI and the Working Group set up by the MCA on the design of these Rules and Regulations.

Insolvency Resolution Process Regulations

Application to Adjudicating Authority Rules

Overview

The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 provide requirements for the conduct of the liquidation process under the Code.

The liquidation process for corporate persons enables the orderly winding up of the corporate debtor. To facilitate the winding up of the debtor, the Code enables the liquidator to collect and adjudicate upon the claims of all the stakeholders of the corporate debtor, sell the assets of the corporate debtor and distribute the proceeds to the stakeholders in order of the priority laid down in the Code.

The Regulations pertaining to the liquidation process define the conditions for the appointment and remuneration of the liquidator, provide requirements regarding collection and verification of claims, sale of assets and distribution of proceeds and put in place a reporting mechanism to hold the liquidator accountable. By putting in place incentives for the liquidator to conclude the liquidation process faster and distribute more, the Regulations aim to make the liquidation process speedy and efficient.

Vidhi assisted the IBBI and the Working Group set up by the MCA in the design of these regulations by providing research assistance on the creation of an optimal framework, collating views of different stakeholders, and by leading the drafting of these regulations.

Overview

Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017

The Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 provide the eligibility requirements for registration as information utilities and the regulatory framework within which information utilities must operate.

Information utilities are an innovation of the Code. They are intended to collect, verify and authenticate financial information pertaining to all classes of debtors and transactions. Critically, they are intended to authenticate the fact of “default”, to lower the time taken in admitting a petition for initiation of the insolvency resolution process for both corporate debtors and other persons.

Given that information utilities are a unique institution, with some overlap with credit information companies, CERSAI, MCA 21, the Regulations focussed on the manner in which they could be operationalized to enable ease of capture and access of information by the utilities.

Vidhi assisted the IBBI and the Working Group set up by the MCA in the design of these regulations by providing research assistance on the creation of an optimal framework, collating views of different stakeholders, and by leading the drafting of these regulations.

Overview

Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process)
Regulations, 2017

The Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 provide the framework for the voluntary winding up of solvent corporate persons.

The Voluntary Liquidation process is initiated by the shareholders or the partners of the corporate person when the corporate person is able to pay all its debtors. This is similar to the liquidation process envisaged under the Code, but with a lower level of oversight of the Adjudicating Authority.

The Regulations pertaining to the voluntary liquidation of corporate persons define the conditions for the appointment and remuneration of the liquidator, provide requirements regarding collection and verification of claims, sale of assets and distribution of proceeds and put in place a reporting mechanism to hold the liquidator accountable.

Vidhi assisted the IBBI and the Working Group constituted by the MCA in the design and drafting of these regulations.

Overview

Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons), Regulations 2017

The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons), Regulations 2017 provide requirements for the conduct of the fast-track insolvency resolution process under the Code.

The fast track insolvency resolution process provides for the conduct of a corporate insolvency resolution process within a period of ninety days, instead of within one hundred and eighty days. This process is designed for those corporate debtors that cannot bear the costs of the longer insolvency resolution process.

The Regulations pertaining to fast-track insolvency resolution process attempt to lower the costs of the insolvency resolution process for MSMEs by bringing down the timelines for the conduct of the processes.

Vidhi assisted the IBBI and the Working Group set up by the MCA in the design of these regulations by providing research assistance on the creation of an optimal framework, participating in stakeholder discussions, and by leading the drafting of these regulations.

Overview

First Report of the Insolvency Law Committee

The Committee recommended several amendments to the Code and subordinate legislations which it considered imperative for smooth functioning of the Code. A few key recommendation made by the Committee in this report are making section 29A less stringent for MSMEs; streamlining disqualifications of resolution applicants made in section 29A; providing that home buyers are financial creditors; clarifying that moratorium in Section 14 does not apply to a guarantor; recalibrating voting threshold for various decisions of the committee of creditors; allowing withdrawal of application for initiation of corporate insolvency resolution process; etc. Most of the recommendations of the Committee have been incorporated into the law through amendment of the Code and subordinate legislation. The discussion of the Committee has also been relied on as a tool for interpretation in various decisions of the Supreme Court.

Overview

Report on Cross-Border Insolvency of the Insolvency Law Committee

This report recommends adoption of UNCITRAL Model Law on Cross-Border Insolvency with appropriate modifications. Globally, the UNCITRAL Model Law has emerged as the most widely accepted legal framework to deal with cross-border insolvency issues and legislation based on the Model Law has been adopted in 44 countries in a total of 46 jurisdictions as on date. The Model Law ensures full recognition of a country’s domestic insolvency law by giving precedence to domestic proceedings and allowing denial of relief under the Model Law if such relief is against the public policy of the enacting country. The Committee has however recommended certain modifications to the Model Law such as providing factors within the Code to assist the adjudicating authority in determining the centre of main interest of the debtor, a reciprocity requirement for applicability of the proposed cross-border insolvency law, etc. The modifications are essentially with a view to make the Model Law workable in the Indian insolvency ecosystem.