3 December 2019

Fee & Expenses in “Insolvency Resolution Process Costs”

The Insolvency and Bankruptcy Code, 2016
# Section 5(13) “insolvency resolution process costs” means –
- (a) the amount of any interim finance and the costs incurred in raising such finance;
- (b) the fees payable to any person acting as a resolution professional;
- (c) any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern;
- (d) any costs incurred at the expense of the Government to facilitate the insolvency resolution process; and
- (e) any other costs as may be specified by the Board;

# Section 208(2) Every insolvency professional shall abide by the following code of conduct: –
- (a) to take reasonable care and diligence while performing his duties;
- (b) to comply with all requirements and terms and conditions specified in the byelaws of the insolvency professional agency of which he is a member;
- (c) to allow the insolvency professional agency to inspect his records;
- (d) to submit a copy of the records of every proceeding before the Adjudicating Authority to the Board as well as to the insolvency professional agency of which he is a member; and
- (e) to perform his functions in such manner and subject to such conditions as may be specified.”.

The IBBI (Insolvency Professionals) Regulations, 2016
# Regulation 16. An insolvency professional must ensure that he maintains written contemporaneous records for any decision taken, the reasons for taking the decision, and the information and evidence in support of such decision. This shall be maintained so as to sufficiently enable a reasonable person to take a view on the appropriateness of his decisions and actions.
# Regulation 25. An Insolvency Professional must provide services for remuneration which is charged in a transparent manner, is a reasonable reflection of the work necessarily and properly undertaken and is not inconsistent with the applicable regulations.
# Regulation 25A. An insolvency professional shall disclose the fee payable to him, the fee payable to the insolvency professional entity, and the fee payable to professionals engaged by him to the insolvency professional agency of which he is a professional member and the agency shall publish such disclosure on its website.
# Regulation 26. An insolvency professional shall not accept any fees or charges other than those which are disclosed to and approved by the persons fixing his remuneration.
# Regulation 27. An insolvency professional shall disclose all costs towards the insolvency resolution process costs, liquidation costs, or costs of the bankruptcy process, as applicable, to all relevant stakeholders, and must endeavour to ensure that such costs are not unreasonable.”.

The IBBI (CIRP) Regulations, 2016 -  Chapter IX Insolvency Resolution Process Cost
# Regulation 31. Insolvency resolution process costs. “Insolvency resolution process costs” under Section 5(13)(e) shall mean-
- (a) amounts due to suppliers of essential goods and services under Regulation 32
(aa) fee payable to authorised representative under sub-regulation (8) of regulation
16A;
(ab) out of pocket expenses of authorised representative for discharge of his functions
under section 25A;
- (b) amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under section 14(1)(d);
- (c) expenses incurred on or by the interim resolution professional to the extent ratified under Regulation 33;
- (d) expenses incurred on or by the resolution professional fixed under Regulation 34; and
- (e) other costs directly relating to the corporate insolvency resolution process and approved by the committee.

# Regulation 32. Essential supplies. The essential goods and services referred to in section 14(2) shall mean-
- (1) electricity;
- (2) water;
- (3) telecommunication services; and
- (4) information technology services,
to the extent these are not a direct input to the output produced or supplied by the
corporate debtor.
Illustration- Water supplied to a corporate debtor will be essential supplies for drinking and sanitation purposes, and not for generation of hydro-electricity.

# Regulation 33. Costs of the interim resolution professional.
- (1) The applicant shall fix the expenses to be incurred on or by the interim resolution professional.
- (2) The Adjudicating Authority shall fix expenses where the applicant has not fixed expenses under sub-regulation (1).
- (3) The applicant shall bear the expenses which shall be reimbursed by the committee to the extent it ratifies.
- (4) The amount of expenses ratified by the committee shall be treated as insolvency resolution process costs.
Explanation. - For the purposes of this regulation, “expenses” include the fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional.

# Regulation 34. Resolution professional costs.
The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process costs.
Explanation. - For the purposes of this regulation, “expenses” include the fee to be
paid to the resolution professional, fee to be paid to insolvency professional entity, if
any, and fee to be paid to professionals, if any, and other expenses to be incurred by
the resolution professional.

# Regulation 34 A. Disclosure of Costs.
The interim resolution professional or the resolution professional, as the case may be, shall disclose item wise insolvency resolution process costs in such manner as may be required by the Board.

Circular No. IP/004/2018 dated 16th January, 2018 
Fees payable to an insolvency professional and to other professionals appointed by an insolvency professional. 

2. The Code of Conduct for Insolvency Professionals under the IBBI (Insolvency Professionals) Regulations, 2016 require that an insolvency professional must provide services for remuneration which is charged in a transparent manner, and is a reasonable reflection of the work necessarily and properly undertaken. He shall not accept any fees or charges other than those which are disclosed to and approved by the persons fixing his remuneration.

3. In view of the above, it is clarified that an insolvency professional shall render services for a fee which is a reasonable reflection of his work, raise bills / invoices in his name towards such fees, and such fees shall be paid to his bank account. Any payment of fees for the services of an insolvency professional to any person other than the insolvency professional shall not form part of the insolvency resolution process cost.

4. Similarly, any other professional appointed by an insolvency professional shall raise bills / invoices in his / its (such as registered valuer) name towards such fees, and such fees shall be paid to his / its bank account.”

5. This circular is issued in exercise of powers under section 196 read with section 208 of the Insolvency and Bankruptcy Code, 2016.

CIRCULAR No. IBBI/IP/013/2018 12th June, 2018
Fee and other Expenses incurred for Corporate Insolvency Resolution Process

3. An IP is obliged under section 208(2)(a) of the Code to take reasonable care and diligence while performing his duties, including incurring expenses. He must, therefore, ensure that not only fee payable to him is reasonable, but also other expenses incurred by him are reasonable. What is reasonable is context specific and it is not amenable to a precise definition. An illustrative list of factors considered in the determination of what is reasonable is given in Annexure B.

6. Keeping the above in view, the IP is directed to ensure that:-
- (a) the fee payable to him, fee payable to an Insolvency Professional Entity, and the fee payable to Registered Valuers and other Professionals, and other expenses incurred by him during the CIRP are reasonable;
- (b) the fee or other expenses incurred by him are directly related to and necessary for the CIRP;
- (c) the fee or other expenses are determined by him on an arms’ length basis, in consonance with the requirements of integrity and independence;
- (d) written contemporaneous records for incurring or agreeing to incur any fee or other expenses are maintained;
- (e) supporting records of fee and other expenses incurred are maintained at least for three years from the completion of the CIRP;
- (f) approval of the Committee of Creditors (CoC) for the fee or other expense is obtained, wherever approval is required; and
- (g) all CIRP related fee and other expenses are paid through banking channel.

7. The Code read with regulations made thereunder specify what is included in the insolvency resolution process cost (IRPC). The IP is directed to ensure that:-
- (a) no fee or expense other than what is permitted under the Code read with regulations made thereunder is included in the IRPC;
- (b) no fee or expense other than the IRPC incurred by the IP is borne by the corporate debtor; and
- (c) only the IRPC, to the extent not paid during the CIRP from the internal sources of the Corporate Debtor, shall be met in the manner provided in section 30 or section 53, as the case may be.

8. It is clarified that the IRPC shall not include:
- (a) any fee or other expenses not directly related to CIRP;
- (b) any fee or other expenses beyond the amount approved by CoC, where such approval is required;
- (c) any fee or other expenses incurred before the commencement of CIRP or to be incurred after the completion of the CIRP;
- (d) any expense incurred by a creditor, claimant, resolution applicant, promoter or member of the Board of Directors of the corporate debtor in relation to the CIRP;
- (e) any penalty imposed on the corporate debtor for non-compliance with applicable laws during the CIRP; [Reference: Section 17 (2) (e) of the Code read with circular No. IP/ 002 / 2018 dated 3rd January, 2018.]
- (f) any expenses incurred by a member of the CoC or a professional engaged by the CoC;
- (g) any expense incurred on travel and stay of a member of CoC; and
- (h) any expense incurred by the CoC directly.
Explanation: Legal opinion is required on a matter. If that matter is relevant for the
CIRP, the IP shall obtain it. If the CoC requires a legal opinion in addition to or in lieu
of the opinion obtained or being obtained by the IP, the expense of such opinion
shall not be included in IRPC.
- (i) any expense beyond the amount approved by the CoC, wherever such approval is required; and
- (j) any expense not related to CIRP.

9. Further, the IP is directed to disclose fee and other expenses in the relevant Form in Annexure C to the Insolvency Professional Agency of which he is a member:
- (a) for all concluded CIRPs by 15th July, 2018, and
- (b) for ongoing and subsequent CIRPs within the time as specified in the relevant Form.

10. An Insolvency Professional Agency shall -
- (a) disseminate the disclosures made by its IPs on an appropriate electronic platform within three working days of receipt of the same;
- (b) monitor disclosures made by its IPs and submit a monthly summary of non-compliance by its IPs with this circular to the IBBI by 7th of the succeeding month;
- (c) take appropriate measures to ensure compliance by its IPs.

11. This circular is issued in exercise of the powers conferred under clause (h) of sub-section (1) of section 196 read with regulation 34A of the IBBI (Corporate Insolvency Resolution Process for Corporate Persons) Regulations, 2016, in consultation with all the three registered Insolvency Professional Agencies.

Annexure B of CIRCULAR No. IBBI/IP/013/2018 12th June, 2018
What is Reasonable ‘Cost’ and Reasonable ‘Fee’

I. As regards reasonable costs, 
the Society for Insolvency Practitioners of India, in its statement of best practices on “PAYMENT OF CORPORATE INSOLVENCY RESOLUTION PROCESS COSTS” observes:

“Insolvency professionals must ensure that the costs incurred are reasonable. To determine the reason-ability of these costs, they should consider if the costs are-
- (a) directly related to the insolvency resolution process,
- (b) necessary for meeting the objectives of the insolvency resolution process, and the Code,
- (c) proportional to the work required to be done and the assets of the corporate debtor, and
- (d) determined on an arms’ length basis, in consonance with the requirements of integrity and independence.”

II. As regards reasonable fee
the Society for Insolvency Practitioners of India, in its statement of best practices on “PAYMENT OF FEE AND REIMBURSEMENT OF OUT-OF-POCKET EXPENSES” suggests:

“Factors to be considered while charging fee
(i) An insolvency professional may charge a fixed or variable fee to reasonably remunerate him/her for the work that he/she necessarily and properly undertakes for an appointment under the Code. In determining what is necessary and proper, the insolvency professional should consider if the work is-
- (a) directly related to the insolvency resolution process,
- (b) in furtherance of the exercise of the powers and functions under Code, professional standards, and the terms of agreement, and
- (c) in consonance with his/her duties under the Code and the Regulations thereunder.
(ii) An insolvency professional may use one or a combination of bases to charge a fee for carrying out different tasks or discharging different duties. The bases of charging fee include:
- (a) time based charging,
- (b) prospective fee (up to a cap),
- (c) fixed fee,
- (d) percentage based charging,
- (e) success or contingency fee, only to the extent that it is consistent with the requirements
of integrity and independence of insolvency professionals.
Illustration: X is appointed as an IRP. She can charge a cumulative of fixed fee to suspend the board of directors and have the public announcement made, fee per hour spent on collecting and verifying claims, and a fee based on the percentage of assets handled for running the business as a going concern.
(iii) An insolvency professional should consider the following factors while determining the quantum of fee to be charged:
- (a) value and nature of the assets dealt with,
- (b) time properly given by the insolvency professional and her staff in attending to the affairs of the debtor,
- (c) the complexity of the case,
- (d) exceptional responsibility falling on the insolvency professional,
- (e) the effectiveness with which the insolvency professional carries out her duties.
Illustration: X, an insolvency professional, may choose to charge higher fee if-
- (a) the properties of the corporate debtor are in multiple locations all over the country (nature of property),
- (b) key trade suppliers are also unpaid creditors and thus hostile (complexity of the case), or
- (c) if the existing management is not capable which requires him to expend unusual effort to run the business as a going concern (exceptional responsibility).
(iv) An insolvency professional should not increase the fee charged without the prior approval of the authority fixing his/her fee.”

III. Rule 1.04(b) of the Texas Disciplinary Rules of Professional Conduct, which sets forth eight factors to determine what is a reasonable fee in the context of lawyers, reads as under:
“Factors that may be considered in determining the reasonableness of a fee include, but not to the exclusion of other relevant factors, the following:
- (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
- (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
- (3) the fee customarily charged in the locality for similar legal services;
- (4) the amount involved and the results obtained;
- (5) the time limitations imposed by the client or by the circumstances;
- (6) the nature and length of the professional relationship with the client;
- (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
- (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.”

Comments by Author
1. Circular No. IBBI/IP/013/2018 has been issued under the provisions / powers conferred under clause (h) of sub-section (1) of section 196 read with regulation 34A of the IBBI (Corporate Insolvency Resolution Process for Corporate Persons) Regulations, 2016, in consultation with all the three registered Insolvency Professional Agencies. The relevant provisions reads as under;
- Section 196(1). Powers and functions of Board. -
(h) call for any information and records from the insolvency professional agencies,
insolvency professionals and information utilities;
- Regulation 34 A. Disclosure of Costs.
The interim resolution professional or the resolution professional, as the case may be
shall disclose item wise insolvency resolution process costs in such manner as may be
required by the Board.

From the plain reading of the above provisions of the Code & Regulations, it is clear that except clause no. 9 & 10 of the circular, all other clauses are without any authority. It is quite surprising that Board has taken disciplinary action for violation of clause 8(h) of the circular in the matter of Mr. Mahender Kumar Khandelwal.

2. Under clause 3 of the said circular (Circular No. IBBI/IP/013/2018), the Board has directed IP’s to follow statement of best practices of The Society for Insolvency Practitioners of India, in respect of  “As regards reasonable costs” & “As regards reasonable fee”. I am of the view that the Board should have, after necessary deliberations & consultations, issued Regulations for the same, under the powers granted under section 5(13)(e), instead of circulating the statement of best practices of The Society for Insolvency Practitioners of India. 

Disclaimer: The sole purpose of this blog is of creating awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

2 December 2019

Role of Resolution Professional in distribution of funds in CIRP

Approval of resolution plan & distribution of funds during CIRP, are governed by Section 30 of the Code. Section 30 of the Code after amendment w.e.f. 16.08.2019 , reads as under;

Section 30. Submission of resolution plan. -
(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professional prepared on the basis of the information memorandum.

(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan -
(a) provides for the payment of insolvency resolution process costs in a manner
specified by the Board in priority to the payment of other debts of the corporate
debtor;
(b) provides for the payment of debts of operational creditors in such manner as may
be specified by the Board which shall not be less than-
- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or
- (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, 
whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor.
Explanation 1. — For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.
Explanation 2. — For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor-
(i) where a resolution plan has not been approved or rejected by the Adjudicating
Authority;
(ii) where an appeal has been preferred under section 61 or section 62 or such an
appeal is not time barred under any provision of law for the time being in force;
or
(iii) where a legal proceeding has been initiated in any court against the decision of
the Adjudicating Authority in respect of a resolution plan
(c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan;
(d) The implementation and supervision of the resolution plan;
(e) does not contravene any of the provisions of the law for the time being in force
(f) confirms to such other requirements as may be specified by the Board.
Explanation. — For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.

(3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2).

(4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent. of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board: …………………...

The portion in italics is after amendment, and the present discussion is centered on the impact of the amendments shown in bold letters.

Relevant / corresponding CIRP regulations reads as under;
# Regulation 35. Fair value and Liquidation value.
(2) After the receipt of resolution plans in accordance with the Code and these regulations, the resolution professional shall provide the fair value and the liquidation value to every member of the committee in electronic form, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value and the liquidation value and shall not use such values 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:
(3) The resolution professional and registered valuers shall maintain confidentiality of the fair value and the liquidation value.”.

# Regulation 38. Mandatory contents of the resolution plan.
(1) The amount payable under a resolution plan -
- (a) to the operational creditors shall be paid in priority over financial creditors; and
- (b) to the financial creditors, who have a right to vote under sub-section (2) of section 21
and did not vote in favour of the resolution plan, shall be paid in priority over financial
creditors who voted in favour of the plan.”
(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all
stakeholders, including financial creditors and operational creditors, of the corporate debtor.

From the above it can be observed that
i) Sub-section (2) of section 30 has inherent contradictions.
- “The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan” ……... “and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board”, 
The quantum of distribution to dissenting FC will be known only after the approval of the resolution plan, than how RP can confirm to the CoC that the Resolution Plan being submitted provides for the payment of dissenting FC as per section 30(2).

ii) In the recent amendments (w.e.f. 16.08.2019), the concept of minimum amount [in terms of  Section 53(1)] to be paid to operational creditor, has been extended to dissenting financial creditor also, which has far reaching consequences. A financial creditor will be tempted to become a dissenting creditor if his proposed  share in the resolution plan is lower than the liquidation value of the underlying assets in his secured credit, increasing the chances of pushing greater number of cases towards liquidation. This view has been upheld by Hon’ble SCI in CoC of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors.(Civil Appeal no. 8766-67 of 2019)
- # 54. ……     , secured financial creditors will, in many cases, be incentivised to vote for liquidation rather than resolution, as they would have better rights if the corporate debtor was to be liquidated rather than a resolution plan being approved. This would defeat the entire objective of the Code which is to first ensure that resolution of distressed assets takes place and only if the same is not possible should liquidation follow.

iii). The  amended provisions of the Code now mandates that the resolution plan approved by the CoC provides for the distribution of funds as per Section 53(1) of the Code. Prerequisite to the distribution of funds of resolution plan as per Section 53(1) is the preparation of the list of creditors accordingly. In my view the said amendments, have indirectly thrust upon RP, the duty to follow the provisions of Section 38 to 42 of the Code in preparing the list of creditors, to facilitate CoC in distribution of funds as per section 30(4) of the Code.

iv). After the receipt of valuation report, RP is to recast the list of creditors in terms of Section 53(1), including the priority and value of the security interest of a secured creditor, thus incorporating the value of security interest, to facilitate the CoC to approve the resolution plan, which has to take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor. 

v). Value of security interest can be taken from the valuation report. A resolution applicant is not privy to the valuation report, as per CIRP regulation no 35. The implications of these amendments are that distribution of funds can not be proposed in the resolution plan, which will be decided by the CoC, on the basis of recasted list of creditors, as per the provisions of section 30 & determining the share of dissenting FC. 

vi). The position in respect of the value of security interest is also  not clear. Whether it is, the fair value or liquidation value of the security interest, or average of the both (reserve price as per liquidation regulations), which is to be taken for the purpose of approval of distribution by the CoC under section 30(4) read with section 53(1). 

vii). An unsecured financial creditor has 4th priority in distribution of funds u/s 53(1). Inclusion of a portion of financial credit, in excess of value of security interest, as secured credit, in 2nd priority [Section 53(1) does not speak about the value of security interest] will affect the rights of employees who have 3rd priority under the waterfall. Amendments in section 30(4) of the code have implications to identify and determine the secured and unsecured portion of the credit, on the basis of value of security interest. which has further widened the function of IRP/RP from simply collecting and collating the claims of creditors in CIRP.

viii). In a nutshell, the resolution applicant, as per the amended section 30(4), is not left in a position to propose the distribution of funds to creditors, in the resolution plan, as the funds will be distributed as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor.

Here observations of NCLT Allahabad (24.07.2018) in J.R. Agro Industries P Limited V/s. Swadisht Oils P Ltd. [CA 59 of 2018 in CP 13/ALD/2017] are worth noting:-
- (Page 33/50) “Notably, distinction under section 53 is a two-fold distinction – (i) secured/unsecured, and (ii) operational/financial. As regards secured creditors, it does not matter whether the creditor is financial or operational, since section 53(1)(b) uses the expression “secured,” and there is no indication as to the nature of debt (financial/operational) owed to such secured creditor. However, when it comes to unsecured creditors, unsecured financial creditors appear in the 4th rank; but unsecured operational creditors come in the 6th rank.

On collation / verification of claims during CIRP, the provisions of Code & Regulations are in variance. As per section 18(b) of the Code, one of the duties of an IRP is to receive and collate all claims submitted by creditors to him pursuant to the public announcement & as per section 25, RP’s duty, is to maintain an updated list of claims. Whereas Regulation 13 of the CIRP Regulations mandates that the IRP/RP shall verify the claims submitted to him / her within a period of seven days from the last date of receipt of claims

Recent amendments in  Section 30, has added confusion on the role to be played by the IRP / RP on verification / collation of the claims & / or to facilitate the CoC to decide distribution of funds as per section 30(4). 

Despite the above amendments, NCLAT (24.10.2019) in Commissioner of Income Tax-6 Chennai Vs. Star Agro Marine Exports Pvt. Ltd.[CA (AT)(Insolvency) no.717 of 2019] had ordered as under;
“Prima facie, we find that the amount as proposed by the “Successful Resolution Applicant” is discriminatory and the same treatment has not been given to the “Operational Creditors” as given to the “Financial Creditors”
In the circumstances, we grant one opportunity to the “Successful Resolution Applicant” providing the same treatment to the “Operational Creditors” including the Appellant. Affidavit be filed within two weeks.” 

So the Resolution Professional is in a catch 22 situation. Whether he is to;
1. Collate the claims of creditors as per the provisions of the Code [Section 18(b)]
2. Verify the claims of creditors as per CIRP Regulations (Regulation 13).
3. Follow the Law laid down by the Hon’ble SCI in Swiss Ribbons Pvt. Ltd. & Anr. V/s Union of India & Ors. [Writ Petition (Civil) No. 99 of 2018].
4. Facilitate CoC in distribution of funds as per Section 30(4) r/w Section 53(1) of the Code.
5. Follow / abide by the dictates of NCLAT. 

Board should immediately look into the matter & initiate suitable steps to amend the provisions of the Code and/or CIRP Regulations in consonance with the amendments to section 30 of the Code, to remove confusion & unnecessary litigation.

References;-   
1. Insolvency and Bankruptcy Code (Amendment) Act, 2019 (w.e.f. 16.08.2019)
2. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate 
    Persons) (Third Amendment) Regulations, 2019. (w.e.f. 27.11.2019)
3, eBook  "Claims of Creditors" by Arvind Mangla, a publication of Amazon Kindle Store.

'Disclaimer: The sole purpose of this blog is of  creating awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog

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