Ineligible Promoter – All Doors Shut:

The conundrum whether a scheme of compromise and arrangement can be proposed by the erstwhile promoter at liquidation stage, who otherwise is ineligible to participate in the resolution process under the Insolvency and Bankruptcy Code, 2016 ("Code") has been put to rest by the Insolvency and Bankruptcy Board of India ("IBBI"). The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 ("Liquidation Regulations") was amended by IBBI on 06.01.2020 to clarify that persons not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, cannot submit any scheme of compromise or arrangement during the liquidation stage¹. This amendment per se does not bar every promoter of an ailing company from proposing a scheme but promoters who are otherwise ineligible to submit a resolution plan during the resolution process under the Code.