IBC Rules: A Comprehensive Guide

The Insolvency and Bankruptcy Code (IBC) was introduced to establish a structured, efficient and time-bound mechanism for handling insolvency and bankruptcy cases in India. The IBC Rules streamline debt resolution, safeguard creditor interests and foster a business-friendly environment.

Key Objectives of IBC Rules

• Integration and Efficiency: The IBC consolidates and reforms existing insolvency laws, making them more coherent and efficient.
• Time-Bound Resolution: A critical aspect of the IBC is resolving insolvency cases within a stipulated period, generally 180 days, ensuring swift action.
• Optimizing Asset Value: By preventing the prolonged deterioration of assets, the IBC seeks to maximize the recovery value for creditors.
• Creditor Protection: It safeguards the rights and claims of financial and operational creditors while maintaining a balance with debtor interests.
• Encouraging Entrepreneurship: A clear and fair insolvency resolution framework provides businesses with a second chance while promoting responsible lending and investment.
• Creation of IBBI: The establishment of the Insolvency and Bankruptcy Board of India (IBBI) ensures strict oversight and regulation of the insolvency process.
• Tackling NPAs: The IBC plays a pivotal role in addressing the Non-Performing Asset (NPA) crisis in India’s banking sector.
• Standardized Legal Framework: By harmonizing India’s fragmented bankruptcy laws, the IBC brings uniformity and predictability to insolvency proceedings.

Over the years, The IBC Rules have evolved through amendments, introducing key changes in governance, salary structures and valuation methodologies to improve transparency and efficiency.

IBC Rules 2016

The Ministry of Corporate Affairs (MCA) has framed detailed rules governing the salaries, allowances and other conditions of service for Chairpersons and Members of the Insolvency and Bankruptcy Board of India (IBBI). Below are the key provisions:

1. Short Title & Commencement – These rules are called the Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016.
2. Definitions – Clarifies the terms such as “Board,” “Chairperson,” “Whole-time Member,” and their respective roles.
3. Service Terms – The Chairperson and whole-time members must not have financial interests that may conflict with their duties.
4. Casual Vacancy – If appointed to fill a casual vacancy, they will hold office only for the remainder of the original term.
5. Post-Resignation Employment – Cannot accept employment elsewhere within one year of leaving the Board, except with Central Government approval.
6. Salary Structure –
   • Chairperson: ₹4,50,000 per month or pay equivalent to a Secretary to the Government of India.
   • Whole-time members: ₹3,75,000 per month or pay equivalent to an Additional Secretary.
7. Salary Adjustments for Retirees – If a retiree is appointed, their pension and benefits will be deducted from their new salary.
8. Dearness Allowance – Paid at rates applicable to Group ‘A’ officers of equivalent rank.
9. Entertainment Allowance – Maximum of ₹6,000 per annum.
10. Leave Entitlement – Includes earned leave, half-pay leave, casual leave and restricted holidays.
11. Leave Sanctioning – The President of India sanctions leave for the Chairperson; the Chairperson sanctions leave for members.
12. Provident Fund – Chairperson and members can subscribe to the Contributory Pension Fund.
13. Travel Allowances – Equivalent to those granted to Secretaries and Additional Secretaries of the Government of India.
14. Leave Travel Concession (LTC) – Same as Group ‘A’ officers of equivalent rank.
15. Housing & Accommodation – Entitled to rent-free accommodation, with water, electricity and fuel charges to be borne by the occupant.
16. House Rent Allowance – If private accommodation is used, entitled to 10% of basic pay as compensation.
17. Official Conveyance – Entitled to a staff car for official purposes; the Board cannot purchase vehicles and must hire them.
18. No Bonus – Chairperson and members are not entitled to any bonus.
19. No Sitting Fees – No additional fees for attending Board meetings.
20. Encashment of Leave – Leave encashment allowed up to 300 days, including encashment before superannuation.
21. Medical Facilities – Covered under the Government Health Scheme.

These provisions ensure transparency, efficiency and proper governance in handling insolvency matters in India.

The provisions related to electronic voting (e-voting) in the Insolvency and Bankruptcy Code (IBC) are primarily covered under the following sections:

1. Section 109(4) – It states that proxy voting, including electronic proxy voting, shall take place in such manner and form as may be specified​.
2. Section 25A(1) – The authorized representative of financial creditors has the right to vote on behalf of the creditors via electronic means​.
3. Section 24(1) – Members of the committee of creditors may meet in person or through electronic means​.

For official updates, visit the IBBI website.

Right2Vote: Enhancing CoC eVoting Security and Efficiency

In the evolving landscape of insolvency proceedings, technology is playing an important role in streamlining the processes and ensuring compliance with legal requirements. Right2Vote, a government-certified eVoting platform, is a leading solution for online elections. Tested by the Standardization Testing and Quality Certification (STQC), Directorate under the Ministry of Electronics and Information Technology (MeitY), Right2Vote ensures secure, transparent and legally valid voting for the Committee of Creditors (CoC) in insolvency matters.

Secure and Transparent eVoting

Right2Vote’s online voting platform guarantees the integrity of the voting process through end-to-end encryption, audit trails and legally admissible results. Its robust security mechanisms prevent unauthorized access, ensuring that all votes cast remain confidential and tamper-proof. This is particularly critical in insolvency proceedings, where CoC members must make high-stakes decisions regarding debt restructuring and asset resolution.

One of the standout features of Right2Vote is its do-it-yourself (DIY) platform, which allows insolvency professionals to set up polls quickly and efficiently. The intuitive interface ensures that even those with minimal technical knowledge can create and manage voting events with ease. Moreover, its cost-effective pricing model makes it the preferred choice among leading insolvency firms, offering an affordable yet powerful solution for conducting secure eVoting.

Remote Accessibility and Efficiency

Right2Vote enables stakeholders to participate in the voting process from anywhere in the world, removing geographical barriers that often hinder timely decision-making. This remote accessibility is a significant advantage, especially in insolvency cases where CoC members may be located in different parts of the country or even globally. By allowing secure voting from any device, the platform enhances stakeholder engagement and improves the efficiency of insolvency proceedings.

In addition to its eVoting capabilities, Right2Vote offers a comprehensive suite of features designed to streamline insolvency resolutions. The platform includes a Virtual Data Room (VDR) for secure document sharing, ensuring that sensitive financial and legal information remains protected while being accessible to authorized parties. Furthermore, its eAuction feature facilitates transparent and efficient asset liquidation, helping stakeholders achieve maximum value recovery.

With advanced features such as encryption, remote accessibility, audit trails, VDR and eAuction, Right2Vote empowers insolvency professionals and CoC members to make informed decisions efficiently. As insolvency processes continue to evolve, Right2Vote stands as a reliable partner in enhancing security, compliance and efficiency.

Conclusion

The IBC Rules have revolutionized India’s insolvency framework by ensuring structured, time-bound resolutions with transparent governance. Recent amendments in 2024 and 2022 have further refined regulatory oversight, salaries and compliance mechanisms.

Additionally, digital tools like Right2Vote, Virtual Data Room (VDR) and eAuction improve efficiency in insolvency resolutions, benefiting creditors and businesses alike.

As IBC Rules continue to evolve, their integration with technology-driven solutions will further streamline insolvency proceedings in India.

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