Date : 18-02-2020
The Insolvency and Bankruptcy Code, 2016 (IBC) was introduced to consolidate laws relating to insolvency resolution of corporate persons, firms and individuals.
Insolvency Professional/Resolution Professional (IP/RP)
While the Code in itself is very intricate and accommodates point by point mechanism of insolvency resolution, the obligation and duty of an Insolvency Professional/Resolution Professional (IP/RP) can't be ignored. It is appropriate to express that without there being an IP/RP; no insolvency resolution can occur. Keeping in view the duty of an IP/RP, the capability and experience for appointment has additionally been given under the Code and Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.
A quick look at the arrangements of the Code shows that a job of an Insolvency Professional starts with the documenting of the application for commencement of Corporate Insolvency Resolution Process (CIRP) under Chapter I of the Code. It characterizes Financial Creditor's position to start CIRP under Section 7 of the Code.
The Operational Creditor(s) can start CIRP under Section 8 of the Code and the Corporate Debtor/Applicant may start the CIRP under Section 10 of the Code.
At the point when a Financial Creditor (FC)/Corporate Applicant (CA) starts CIRP, it is obligatory for such FC/CA to outfit the name of the RP proposed to go about as an Interim Resolution Professional (IRP). Notwithstanding, if there should arise an occurrence of an Operational Creditor (OC), the necessity to outfit such detail isn't obligatory in nature. In any conditions, IRP is appointed within 14 days from the date of beginning of insolvency.
Promptly on appointment of IRP, the administration of the Corporate Debtor undertakings vests with the IRP. IRP is fundamentally committed to assume control over the administration of the Company and to order all data with respect to resources, accounts and activities of the Company, to plan a Committee of Creditors ("CoC"), to lead CoC Meetings, delegate valuers and reviewers and to get and group or concede cases of various creditors.
In the said procedure, the work force of the Company is under a commitment to stretch out total co-activity to the IRP for running the Company as a going concern.
Another essential obligation of the IRP is to establish a CoC which will contain all FCs of the Corporate Debtor (CD) and in the event that there is no FCs, at that point the CoC will be shaped involving just OC. The Code commands that the CoC in its first gathering will set out to designate or supplant the IRP as the Resolution Professional.
QUALIFICATION OF IP
The qualifications of an Insolvency Professional are found out at different stages. An Insolvency Professional is designated as the IRP by the Adjudicating Authority simply in the wake of finding out his qualification. There ought to be no disciplinary procedures pending against him. From there on, when a resolution is passed to delegate the IRP as the Resolution Professional, even at that stage one can say that the credentials of an Insolvency Professional are found out.
In spite of such checks, there have been occurrences where it has been seen by the Insolvency and Bankruptcy Board of India ("IBBI") that the IPs have negated the arrangements of the Code and have attempted to exceed their forces.
OBLIGATION OF RP
Prior to dealing with such examples, it is basic to call attention to the obligations of the RP in the CIRP. Section 25 of the Code accommodates obligations of RP. A point by point perusing of the said provisions and regulations explains that RP is to take control and deal with the benefits alongside the matter of the CD. Also, RP is committed to speak to and ensure the enthusiasm of the CD. RP is additionally enabled to delegate bookkeepers, legitimate or different experts for help with the procedure of CIRP. Nonetheless, activities of RP are dependent upon endorsement from the CoC.
IBBI saw the RP as blameworthy of repudiating the arrangements of the Code and furthermore saw him as liable of scheming with the CD to acquire a Resolution Plan from a questionable Resolution Applicant and IBBI dropped the enlistment of the Resolution Professional and furthermore suspended him from looking for new enrollment as an Insolvency Professional for the following 10 years.
In a comparable case, the IBBI has practiced its forces to drop enrollment of the Resolution Professional in the wake of seeing him as blameworthy of deceiving the CoC and the Adjudicating Authority the same.
IBBI is likewise taking perception of cases identified with unfortunate behavior by Insolvency Professionals. In a couple of cases, financial punishment has been forced on the Insolvency Professionals with certain different perceptions. Likewise, in a couple of cases, just enlistment of the Insolvency Professional has been suspended.
It is intriguing to take note of that neither the Code, nor any Regulation accommodates any component for Appeal against a request passed by IBBI. In such a situation, an IP has no effective remedy, however to summon the Writ ward under the arrangements of Articles 226 and 227 under the Constitution of India.
In perspective on the previously mentioned realities and legitimate position, it very well may be abridged that in spite of the fact that the Insolvency Professionals have been conceded controls under the Code to manage, oversee and assume responsibility for the issues and the executives of a Corporate Debtors; in any case, such force isn't liberated. The IBBI just as National Company Law Tribunals have been aware of the way that the Insolvency and Bankruptcy Code, 2016 is a generally new authorization and the people including the IPs are advancing with changes and advancements right now. Since the origin of the Code in the year 2016, IPs has moved in the direction of Resolution of an indebtedness procedure. Around, 40 cases have seen Resolution Plans till date, which have empowered loan bosses to recuperate enormous measures of cash. Subsequently, the ability and endeavors of IPs must be recognized.
Disclaimer: -This article is for the general information and awareness of its readers, In-case of any legal matter in relation with readers, they are expected to have legal opinion before placing reliance on it. Further it contains completely author's views on the subject and completely unbiased based on authors own experience, study and understanding.
Author : Shivani Aggarwal