Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2021

  December 3, 2021

The IBBI has recently released the Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2021 (‘Guidelines’).

These Guidelines shall be effective from January 1, 2022 and shall supersede the Guidelines [Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustee (Recommendation) Guidelines, 2021] issued on June 1, 2021.

Need for these Guidelines as cited by the IBBI: 

Currently, under the IBC, the NCLT appoints Insolvency Professionals to act as the Interim Resolution Professional (‘IRP’), Resolution Professional (‘RP’), or the Liquidator for corporate debtors under the corporate insolvency resolution process (‘CIRP’), and to act as the RP or Bankruptcy Trustee (‘BT’) for individuals under individual insolvency resolution process.

In many cases under the CIRP, the party moving an application for the appointment of an IP, himself proposes a name. However, in those cases where no such proposal is there, the NCLT makes a reference to the IBBI to recommend an IP for appointment. The process of reference, recommendation and appointment entails some delay. Hence, to plug this gap, the IBBI has recommended the said Guidelines. Regarding individual insolvencies, these Guidelines are made pursuant to the Rules relating to individual insolvency resolution that empower the IBBI to share a Panel of IPs to be appointed as RPs and BTs.

Guidelines 

  • Panel of IPs
    1. Under the Guidelines, the IBBI would appoint a common Panel of IPs for appointment as IRP, Liquidator, RP and Bankruptcy Trustee and share it with the NCLTs and the Debt Recovery Tribunals from which they may make the appointments. 
    2. This Panel may be used for appointments under the pre-pack insolvency resolution process for MSMEs as well.
    3. The Panel will have Zone-wise list of IPs based on their address as per their IBBI’s registration records.
    4. The IBBI Has listed 15 Zones that cover all the states and the union territories of India.
    5. A new Panel will replace the earlier Panel every six months. 
  • Inclusion of the IPs to the Panel

An IP can be in the Panel if

    1. No disciplinary proceeding is pending against him from the IBBI or the Insolvency Professional Agency of which he is a part,
    2. No conviction lies against him in the last three years from a competent court,
    3. He holds an Authorisation for Assignment which is valid till the validity of the Panel.
  • Order of IPs in the Panel
    1. The eligible IPs will be added to the Panel in order of the volume of their ongoing assignments, such that the IP having the lowest number of assignments will be put on the top.
    2. In determining the order of the IPs on the Panel, different assignments will be given different weightage. The order of assignments as per decreasing weightage is:
      • RP (corporate debtor)
      • RP (fast-track process)
      • IRP (corporate debtor), Liquidation, Voluntary Liquidation
      • IRP (fast-track process)
      • RP (individual insolvency), Bankruptcy Trustee
  • Obligations of the IPs in the Panel

           During the validity of the Panel, the empanelled IPs shall not

    1. Withdraw their interest to act as the IRP, Liquidator, RP or BT.
    2. Decline to act as the IRP, Liquidator, RP, or BT after appointment. An IP who declines to take up the assignment after appointment shall not be included in the Panel for the next five years, without prejudice to any other action that may be taken by the IBBI.
    3. Surrender their registrations to the IBBI or membership or Authorisation for Assignment to their respective agencies.
  • Disclaimers
    1. The NCLT may require the IBBI to recommend an IP from or outside the Panel, in which case, the IBBI would accordingly make the recommendation,
    2. An IP in the Panel can be appointed by the NCLT in its sole discretion.

 

The text of the Guidelines is available on the official website of the IBBI here.

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