STATUTORY UPDATES
The Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (recommendations) Guidelines, 2021
- Insolvency and Bankruptcy Board of India (IBBI) on June 1, 2021 issued guidelines for Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendations) Guidelines, 2021, (Guidelines), superseding the previous guidelines in this regard.
- Purpose: In terms of Section 16(3) of the Insolvency and Bankruptcy Code, 2016 (IBC), the IBBI is required to recommend a Panel of Insolvency Professionals (IPs) for appointment as an Insolvency Resolution Professional (IRP). By virtue of these guidelines, the IBBI intends to ease the process of appointment of the IRP by the Adjudicating Authority, by providing a Panel of Insolvency Professionals to the Adjudicating Authority, out of which the IRP on the initiation of Corporate Insolvency Resolution Process (CIRP) may be appointed.
- The Guidelines provide certain criteria basis which an
Insolvency Professional may be included in the Panel of IPs and,
thereafter, appointed by the Adjudicating Authority, which are
enumerated here below:
- There is no pending disciplinary proceeding against the Insolvency Professional that has been either initiated by the IBBI or the Insolvency Professional Agency (IPA) of which the Professional is a member.
- The professional under consideration has not been convicted at any time in the last three years by a court of competent jurisdiction.
- The professional under consideration has expressed his interest to be included in the Panel for the relevant period.
- The professional under consideration has undertaken to discharge the responsibility as IRP, Liquidator, Resolution Professional or Bankruptcy Trustee, if and when appointed by the Adjudicating Authority.
- The professional under consideration held an Authorization for Assignment (AFA), which remains valid till the validity of Panel.
- The aforementioned Panel shall have Zone wise list of IPs. An IP will be included in the Panel against the Zone where his registered office (address as registered with the Board) is located.
- Panel of IPs:
- The Panel of Insolvency Professionals, prepared by the IBBI, shall be shared with the relevant Adjudicating Authority [NCLT and Debt Recovery Tribunal (DRT)].
- The Panel shall be valid for six months and a new Panel will replace the earlier Panel every six months.
- NCLT may select any name from the Panel for appointment of IRP, Liquidator, Resolution Professional or Bankruptcy Trustee for a CIRP, Liquidation Process, Insolvency Resolution or Bankruptcy Process relating to a corporate debtors and personal guarantors to corporate debtors, as the case may be.
- DRT may pick up any name from the Panel for appointment as Resolution Professional or Bankruptcy Trustee, for an Insolvency Resolution or Bankruptcy Process for personal guarantors to corporate debtors, as the case may be.
- Expression of Interest: In order to select the Insolvency Professionals to be included in the Panel, the IBBI shall invite Expression of Interest from these professionals in 'Form A' by sending an e-mail to the respective registered email addresses with the IBBI. The expression of interest must be received by the Board in Form A by the specified date.
- Upon receiving the Expression of Interest, the eligible Insolvency Professionals in order to be included in the Panel will be evaluated and scored upon the volume of ongoing processes of each professional. The IP who has the lowest volume of ongoing processes will get a score of 100 and will be at the top of the Panel. The IP who has the highest volume of ongoing processes will get a score of 0 and other IPs will get scores between 0 and 100 depending on volume of their ongoing assignments. Where two or more IPs get the same score, they will be placed in the Panel in the order of date of their registration with the Board. This process for preparation of Panel of IPs will be undertaken by a team of officers of the Board, identified by a Whole-Time Member.
- Obligations of IPs in the Panel: The
participating Insolvency Professional must understand that, in case
such professional is selected in the Panel then such professional
may not:
- Withdraw its interest to act as IRP, Liquidator, Resolution Professional or Bankruptcy Trustee, as the case may be
- Decline to act as IRP, Liquidator, Resolution Professional or Bankruptcy Trustee, as the case may be, if appointed by the AA
- Surrender its registration to the IBBI or membership or AFA to his IPA; during the validity of the Panel
- Miscellaneous conditions: It is pertinent to
note that in addition to the above-mentioned guidelines, the
following conditions may be required to be expressly followed:
- The Adjudicating Authority may require the IBBI to recommend an Insolvency Professional from or outside the Panel.
- An Insolvency Professional in the Panel can be appointed as IRP, Liquidator, Resolution Professional or Bankruptcy Trustee, at the sole discretion of the Adjudicating Authority.
- The submission of Expression of Interest is an unconditional consent by the IP to act as an IRP, Liquidator, Resolution Professional or Bankruptcy Trustee of any process relating to a corporate or individual debtor, as the case may be.
- An Insolvency Professional who declines to act as IRP, Liquidator, Resolution Professional or Bankruptcy Trustee, as the case may be, on being appointed by the Adjudicating Authority, shall not be included in the Panel for the next five years, without prejudice to any other action that may be taken by the IBBI.
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