Insolvency professional not to outsource his responsibilities-IBBI

Insolvency professional not to outsource his responsibilities. The Code read with regulations do not envisage such a certification from a third person.

The Insolvency and Bankruptcy Code, 2016 (Code) read with regulations made thereunder cast specific duties and responsibilities on an insolvency professional. An insolvency professional is required to perform certain tasks under the Code while acting as an Interim Resolution Professional, a Resolution Professional, a Liquidator or a Bankruptcy Trustee for various processes. For example, an insolvency professional is required to manage the operations of the corporate debtor as a going concern. He is also required to invite resolution plans, examine them and present to the committee of creditors for its approval such resolution plans which comply with the provisions of the Code. To assist him in carrying out his responsibilities, the Code read with regulations allow an insolvency professional to appoint accountants, legal or other professionals, as may be necessary.

In a recently issued circular, the Insolvency and Bankruptcy Board of India has directed that an insolvency resolution professional shall not outsource any of his duties and responsibilities under the Code.

The Board has observed that a few insolvency professionals are advising the prospective resolution applicants to submit a certificate from another person to the effect that they are eligible to be resolution applicants. According to the Board this practice amounts to outsourcing responsibilities of an insolvency professional to another person and also adds to cost of the resolution applicant and delays submission of resolution plans. According to the Board, the Code read with regulations do not envisage such a certification from a third person.

The circular also provides that an insolvency resolution professional shall not require any certificate from another person certifying eligibility of a resolution applicant.