INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
DISCUSSION PAPER
Monitoring the performance of insolvency professionals under the Insolvency and Bankruptcy Code, 2016 and the regulations made thereunder
As stated in its long title, the Insolvency and Bankruptcy Code, 2016 amends the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.
2. The Insolvency and Bankruptcy Code, 2016 (Code) provides for a class of regulated professionals, namely, Insolvency Professionals (IP), who constitute one of the four key pillars of the insolvency regime, other three being the Adjudicating Authority, the Insolvency and Bankruptcy Board of India (Board), and the Information Utilities. The IPs play an important role in resolution, liquidation and bankruptcy processes of companies, LLPs, partnership firms and individuals.
3. This paper limits discussion to role of IPs in corporate insolvency resolution processes (CIRP). Section 20 of the Code requires an IP, who is acting as interim resolution professional, to make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern. Section 23 requires an IP, who is acting as resolution professional, to conduct the entire corporate insolvency resolution process and manage the operations of the corporate debtor during the CIRP period. The IP, either as interim resolution professional or as resolution professional, exercises powers of the Board of Directors of the corporate debtor undergoing CIRP. The specific duties and responsibilities of an IP during CIRP are detailed in the Code and regulations made thereunder.
4. Keeping in view the responsibilities of the IPs, the Code makes provision for monitoring of their performances. It empowers the Board to perform the following functions, among others:
a. monitor the performance of insolvency professional agencies, insolvency professionals and information utilities and pass any directions as may be required for compliance of the provisions of this Code and the regulations issued hereunder; [(section 196(1)(g)]
b. call for any information and records from the insolvency professional agencies, insolvency professionals and information utilities; [(section 196(1)(h)]
c. collect and maintain records relating to insolvency and bankruptcy cases and disseminate information relating to such cases; [(section 196(1)(k)]
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