IBBI (Recommendation) Guidelines, 2021 to allow Insolvency Professionals to act as IRP, liquidators, RP and Bank Trustees

Introduction

The Bankruptcy Board of India (IBBI/the Board) had given new guidelines ‘Insolvency Professionals’ to go about as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Rules. As far as the aforementioned Rules, IBBI has welcomed articulation of interest from IPs, in Form A, by sending an email to IPs at their email addresses registered with the Board.

The Insolvency and Bankruptcy Board of India (IBBI) is needed under the Insolvency and Bankruptcy Code, 2016 (IBC) to suggest the name of an Insolvency Professional (IP) for the arrangement as Insolvency Resolution Professional (IRP) or Liquidator.

Section 16(3)(a) of the Code requires the Adjudicating Authority (AA) to make a reference to the Board for the suggestion of an IP, who may go about as an IRP where an operational lender has made an application for corporate insolvency resolution process (CIRP) and has not proposed an IRP. The Board is needed under section 16(4) of the Code to suggest the name of an IP against whom no disciplinary procedures are forthcoming, within ten days of the receipt of the reference from the AA.

Further section 34(4) of the Code requires the AA to supplant the resolution professional, if (a) the resolution plan put together by the resolution professional under section 30 was dismissed for inability to meet the prerequisites referenced in section 30(2); or (b) the Board suggests the substitution of a resolution professional to the AA for resigns to be recorded as a hard copy; or (c) the resolution professional neglects to submit composed assent under section 34(1). For the reasons for provision (a) and proviso (c) of section 34(4), the AA may coordinate the Board under section  34(5) of the Code to propose the name of another IP to be delegated as a liquidator. The Board is needed under section 34(6) to propose the name of another IP alongside composed assent from him, within ten days of the heading given by the AA under section 34(5).

The NCLT may select any name from the panel for arrangement of IRP, Liquidator, RP or BT, for a CIRP, Liquidation Process, Insolvency resolution or Bankruptcy process identifying with corporate debt holders and personal guarantors to corporate debt holders, by and large. The DRT may get any name from the Board for appointment as RP or BT, for an Insolvency resolution or Bankruptcy process for personal guarantors to corporate debtors, by and large.

Further, it takes some effort for a reference or a course from the AA to arrive at the Board. The Block may take to ten days to recognize an IP for the reason. It likewise requires some investment for the proposal of the Board to arrive at the AA, after which the AA could delegate the suggested IP. The cycle of arrangement may involve 2-3 weeks, which could be saved if the AA has a prepared Board of IPs suggested by the Block and it can pick any name from the Board for an appointment while giving the order itself.

Conclusion

The guidelines issued by IBBI to make rules for Insolvency Professionals to act as Interim Resolution Professionals, RP and BT will help to save time and the required delegation. Now the authority of the IBBI to suggest names for IRPs, RP, and BT will allow them to suggest from the Insolvency Professional list itself. The suggested lists can then be picked by NCLT according to the required criteria, this will help IBBI to save the required time and delegations for searching separate professionals for all the separate roles but after the current guidelines, it can happen more efficiently and effectively with the power of IBBI to suggest among the IPs itself for all the mentioned separate roles.

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