Monitoring the performance of insolvency professionals under the Insolvency and Bankruptcy Code, 2016 and the regulations made thereunder
Insolvency And Bankruptcy Board Of India (IBBI) has brought a discussion paper on the subject of monitoring the performance of insolvency professionals under the Code. The discussion paper is limited to the role of IPs in corporate insolvency resolution processes (CIRP).
According to the IBBI public consultation enables collective choice and imparts relevance and legitimacy to decisions. Accordingly, the Board invites comments, suggestions and feedback covering modifications / additions / deletions / regrouping in the contents in Forms A to H and timing of filing.
The comments and suggestions may be mailed at email@example.com by 12th May, 2018 in the prescribed format:
Monitoring performance of insolvency professionals
The highlights of the discussion papers are as under:
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.
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.
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.
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)]
In order to facilitate the IBBI to monitor the performance of the IPs, the Code casts obligations on them to submit certain information. The examples are:
a. The resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. [section 31(3)(b)]
b. Every insolvency professional shall submit a copy of the records of every proceeding before the Adjudicating Authority to the Board as well as to the insolvency professional agency of which he is a member. [section 208(2)(d)]
c. A professional member shall submit information, including records of ongoing and concluded engagements as an insolvency professional, in the manner and format specified by the Agency, at least twice a year. [Para 16 of the Model Bye-laws of an Insolvency Professional Agency]
6. In order to facilitate and submission of records by IPs and monitoring of their performance, the Board proposes, in consultation with the Insolvency Professional Agencies, to provide a platform for online filing of eight forms along with records at specified times as under:
a. The forms shall be filed electronically.
b. Three forms (A, B and C) shall be filed by Interim Resolution Professional. Four forms (D, E, F and G) by the Resolution Professional, and one event-specific form (H) by IRP or RP, as the case may be, depending upon the period of the event.
c. The forms shall be certified and filed by the Insolvency Professional of the respective corporate debtor undergoing CIRP by affixing DSC or after e-signing.
d. The forms shall be filed with a nominal fee.
e. The forms shall be filed within the specified time.
f. Late filing, inaccurate filing, and incomplete filing shall be construed as noncompliance with the directions of the Board.
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