Insolvency Professionals to act as Interim Resolution Professionals and Liquidators (Recommendation) (Second) Guidelines, 2018

Dec 03, 2018 | by Avantis RegTech Legal Research Team

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The Insolvency and Bankruptcy Board of India (IBBI) on November 30, 2018 has issued the “Insolvency Professionals to act as Interim Resolution Professionals and Liquidators (Recommendation) (Second) Guidelines, 2018” for the purpose of smooth functioning of Sections 16 and 34 of the Insolvency and Bankruptcy Code, 2016.

The guidelines are as under:

·         When a reference or direction is received under section 16 or 34 of the Code from the Adjudicating Authority (AA) for recommending / proposing the name of an insolvency professional (IP), the IBBI has no information about the volume, nature and complexity of the corporate insolvency resolution process (CIRP) or Liquidation Process and the resources available at the disposal of an IP. In such a situation, the IBBI is unlikely to add much value by recommending an IP for a CIRP / Liquidation.

·         Further, it takes some time for a reference or a direction from the AA to reach the IBBI. The IBBI may take up to ten days to identify an IP for the purpose. It takes also some time for the recommendation of the Board to reach the AA, after which the AA could appoint the recommended IP. The process of appointment of an IRP or Liquidator may entail 2-3 weeks, which could be saved if the AA has a ready panel of IPs recommended by the Board and it can pick up any name from the Panel while issuing the Order.

·         Every IP is equally qualified to be appointed as the IRP/Liquidator of any CIRP/Liquidation, if otherwise not disqualified, and in the interest of avoiding administrative delays, it is necessary to have guidelines to prepare a Panel of IPs for the purpose of section 16(4) and 34(6) from amongst the registered IPs.

·         Panel of IPs:

1.       The IBBI will prepare a common Panel of IPs for appointment as IRPs and Liquidators and share the same with the AA. The AA may pick up any name from the Panel for appointment of IRP or Liquidator, as the case may be, for a CIRP or Liquidation process, respectively. The Panel will have Bench wise list of IPs based on the registered office of the IP. It will have a validity of six months and a new Panel will replace the earlier Panel every six months.

2.       An IP will be eligible to be in the Panel of IPs if:

a.       there is no disciplinary proceeding, whether initiated by the Board or the IPA of which he is a member, pending against him;

b.      he has not been convicted at any time in the last three years by a court of competent jurisdiction;

c.       he expresses his interest to be included in the Panel for the relevant period; and

d.      he undertakes to discharge the responsibility as IRP or Liquidator, as he may be appointed by the AA.

3.       An IP will be included in the Panel against the Bench under whose jurisdiction his registered office (his address as registered with the Board) is located.

·         Expression of Interest:

The Board shall invite expression of interest from IPs in Form A to act as an IRP or Liquidator by sending an e-mail to IPs at their email addresses registered with the Board. The expression of interest must be received by the Board in Form A by the specified date. It must be explicitly understood that an IP, who is included in the Panel based on his expression of interest, must not:

a.       withdraw his interest to act as IRP or Liquidator, as the case may be;

b.      decline to act as IRP or Liquidator, as the case may be, if appointed by the AA; or

c.       Surrender his registration to the Board or membership to his IPA during the validity of the Panel.

It must be explicitly understood that:

a.       the AA may require the Board to recommend an IP from or outside the Panel and in such cases, the Board shall accordingly recommend an IP;

b.      an IP in the Panel can be appointed as IRP or as Liquidator, at the sole discretion of the AA;

c.       the submission of expression of interest is an unconditional consent by the IP to act as an IRP or Liquidator, for any corporate debtor; and

d.      an IP who declines to act as IRP or Liquidator, as the case may be, on being appointed by the AA, shall not be included in the Panel for the next five years, without prejudice to any other action that may be taken by the Board.

·         Ongoing Assignments:

The eligible IPs will be included in the Panel in order of the volume of ongoing processes they have in hand.

·         Review:

       The guidelines will be reviewed by the Board from time to time.

The Guidelines shall come into effect for appointments as IRPs and Liquidators with effect from January 01, 2019.



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