The management of a stressed company undergoing the new creditor-initiated insolvency resolution process (CIIRP) will likely be subject to checks and balances, including limits on financial transactions without the committee of creditors’ approval, a move aimed at protecting the integrity of the rescue process and curbing potential wrongdoing.
The proposals are made by a panel set up by the insolvency watchdog to suggest regulations aligning with the amended Insolvency and Bankruptcy Code (IBC).
The safeguards are warranted as, unlike in the extant system, the management of the bankrupt company will continue to run the affairs under the supervision of a resolution professional in the CIIRP.
Under the usual corporate insolvency resolution…