How is Information Memorandum Prepared?

Status as on- 17/05/2021.

Section5(10) of IBC, defines “information memorandum” as a memorandum prepared by resolution professional under Section 29(1) of IBC. The purpose of an information memorandum is to support ‘decision making’ and to make a better decision in a particular problem situation that might otherwise have made without the analysis. Other purposes of an information memorandum includes: conveying information, informing decisions, making a request, providing a response to a question, making a suggestion, presenting an informal report, proposing a solution to a problem, or documenting a reference for future use.

PREPARATION OF INFORMATION MEMORANDUM

Under Section 29 of IBC, a resolution professional shall prepare an information memorandumin such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan.
The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes-
to comply with provisions of law for the time being in force relating to confidentiality and insider trading;
to protect any intellectual property of the corporate debtor it may have access to; and
not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with.
The resolution professional shall submit the information memorandum in electronic form to each member of the committee within two weeksof his appointment, but not later than fifty-fourth day from the insolvency commencement date, whichever is earlier.

CONTENTS OF INFORMATIONAL MEMORANDUM

The information memorandum shall contain the following:

All the assets and liabilities with such description, as on the insolvency commencement date, as are generally necessary for ascertaining their values.
The latest annual financial statement.
The audited financial statements of the corporate debtor for the last two financial years and provisional financial statements for the current financial year made up to a date not earlier than fourteen days from the date of the application.
A list of creditors containing the names of creditors, the amounts claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims.
The particulars of a debt due from or to the corporate debtor with respect to related parties.
The details of guarantees that have been given in relation to the debts of the corporate debtor by other persons, specifying which of the guarantors is a related party.
The names and addresses of the members or partners holding at least one per cent stake in the corporate debtor along with the size of stake.
The details of all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities.
The number of workers and employees and liabilities of the corporate debtor towards them.
Any other information, which the resolution professional deems relevant to the committee.

RESOLUTION PROFESSIONAL SHALL NOT SHARE ANY INFORMATION WITHOUT UNDERTAKING FROM MEMBERS

The resolution professional shall share the information memorandum after receiving an undertaking from a member of the committee to the effect that such member or resolution applicant shall maintain confidentiality of the information and shall not use such information to cause an undue gain or undue loss to itself or any other person and comply with the requirements under Section 29(2) of IBC.

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