Vendors can use GST returns as proof of default: Insolvency regulator

NEW DELHI:  In a bid to reduce the delays in the resolution process, the Insolvency Bankruptcy Board of India (IBBI) has proposed some changes in the insolvency and bankruptcy regulations. The IBBI has recommended changes in the law to provide for filing copies of GSTR-1 and GSTR-3B returns filed by the operational creditors along with e-way bills as additional documentary evidence of the debt and default.

It is also proposed that the same information may also be submitted as part of the claim documents submitted to the IRP or the interim resolution professional for easier verification and admission of claims.
The insolvency regulator has cited delay in the admission of insolvency cases by the National Company law Tribunal (NCLT) for taking such measures. According to IBBI, the average time taken for admission or rejection of a case from the day of filing of an insolvency petition was 650 days in 2021-22 against the prescribed time of 14 days.

IBBI has also proposed an amendment to impose an obligation on the committee of creditors (CoC) with regard to providing all the relevant information they possess in terms of the assets of the corporate debtors (CD) from valuation exercises of stock audits, the relevant extracts from the transaction or forensic audits to IRP/RP in a timely manner. In addition, an amendment to enable the interim resolution professionals/resolution professional to seek relevant information from the promoters of a defaulting company, employees, partners and others and to place an obligation on them to share all the information that is sought by the IRP/RP in a timely manner has also been sought.

The insurance regulator has also proposed to remove the ambiguity regarding the appointment of a third valuer in case of a significant difference in the valuation of a corporate debtor’s assets given by two values.

The IBBI proposes that if the difference between two valuations is more than 25%, in that case, the resolution professional can appoint a third valuer. Stakeholders can submit their views on the proposed changes by 02 May 2022.


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