IP VN Dubey

  June 10, 2021

“The promoter may be a bad parent, but the company is their child.”


(Mr. Dubey is an advocate based in Indore, who is qualified to be an IP. The following are excerpts from our chat with him.)


‘I have not seen any other law stabilise so quickly in my career.’


‘It is highly commendable how the high courts adopted a policy of non-interference with the Code u/s 226 and 22. Otherwise, filing writ petitions for this and that reason is the favourite thing to do for lawyers.’


‘Justice Rohinton Nariman has truly been a pillar for the IBC. The landmark judgments he has delivered, whether it be Swiss Ribbons or Bishal Jaiswal, are a detailed study of national as well as international insolvency laws.’


‘Being an IRP or an RP is no easy task. He has to don many hats all at once. And we must note that a one-man board can be very difficult and very dangerous. Especially in a situation where everything has been derailed. That too when everyone wants to manipulate him for their interests, but no-one wants to support him.’


‘There are many practices which may not be strictly by the books. For example, an MD billing his Europe trip to the company’s accounts. But they are a part of the regular practice in the corporate world.’


‘It is easy to spot the irregularities in the company accounts, even with a basic finance understanding. Often, even a forensic audit is not required. Most companies have some sort of the PUFE transactions, and that is the reality with which a RP has to deal.’


‘The first thing an RP is asked about the resolution plan by the CoC is how much they will recover. This defeats the purpose of the resolution process. How will any corporate debtor see a turnaround this way?’


‘Notwithstanding how unscrupulous a promoter may be, a company is that promoter’s labour of love. The promoter may be a bad parent, but the company is their child. Therefore, the Resolution Professional is like an adoptive parent. They must do what is right for the child, but they should remember that the promoter will always be invested emotionally.’


‘The IBC suspension may not have been the soundest decision legally. Even I had filed a writ petition against Section 10A and the pleadings have been completed in that matter. The term ‘forever’ in that section will allow so many lawyers to take shelter under it for years to come. Having said that, it was the right solution practically since the entire world had come to a standstill. A second suspension would also be justified if it means saving thousands of business from being pushed unnecessarily into CIRP.’


‘The pre-pack framework for MSMEs is a good alternative when the Code is suspended or overwhelmed. However, there is a danger of two types of greed leading it to failure. The first is the promoters wanting a maximum haircut just like in the good old days. The second is the creditors wanting to recover as much as possible and not approving any plan that doesn’t meet their wish.’


‘Besides the promoters and the CoC, it also the responsibility of other stakeholders to realise and appreciate the intent of the Code and to work together to make it a success.’


‘What the Code has done is it has quickly built an ecosystem and has led to developments which otherwise wouldn’t have been possible. For example, ArcelorMittal wanted a foothold in the Indian steel production scene since the longest time. They could finally do it through the Essar acquisition. Without Essar, they might not have achieved an Indian presence even for the next 20 years. Same with Ultra-Tech Cement. Although they had a national presence, they gained access to new regions through the Binani acquisition.’


‘There was a lot of hope when RDB Act came out in ’93. Similarly, SARFAESI felt a game-changer when it came out. Unfortunately, they did not live up to the expectation due to various factors. Now, there are many hopes from the IBC too.’


‘The Adjudicating Authorities have done appreciable work despite the inordinate delays that are frequently pointed out. An application to initiate CIRP taking more than a year to get admitted is still better than what I have seen with other forums like the BIFR and the DRT.’


‘The government has been surprisingly prompt with the amendments, and the courts have clarified and upheld the law whenever required. This has not happened before. Other laws are still being contested and clarified after decades.’


‘The RBI and the financial institutions have the most important role to play. Their conduct will determine the course of the Code because in India, the banks completely dominate the CoCs.’


‘To become an IP, there is a work-experience requirement of 10 years. But those 10 years must have been spent acquiring the necessary knowledge. Warna woh dhoop mein baal safed karne jaisa hain (else it is like greying your hair in the sun). Everyone becomes a ‘senior’ professional eventually.’


‘Young professionals who are enrolling in dedicated and intensive courses and focusing on the industry have a lot of scope. We can hope to eventually become like Europe, where the insolvency professionals are crucial, competent and well-respected.’


(This interview was conducted by Adv. Parth Indalkar and has been edited and condensed for clarity.)

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