IBBI Issues Discussion Paper on Rationalising Assignment Limits for Insolvency Professionals to Curb Delays and Ensure Equitable Distribution
- REEDLAW
- 18 hours ago
- 3 min read
REEDLAW Legal News Network reports: In a significant regulatory move, the Insolvency and Bankruptcy Board of India (IBBI) on 12 August 2025 issued a Discussion Paper proposing to rationalise the assignment limits for Insolvency Professionals (IPs). The initiative aimed to curb delays in resolution and liquidation processes, prevent over-concentration of cases among a few professionals, and ensure equitable distribution of assignments across the IP community.
The paper highlighted that despite having over 4,500 registered IPs, a disproportionate number of assignments were being handled by a limited pool of professionals, with some managing more than 25 simultaneous cases. This imbalance raised serious concerns about quality, efficiency, and timely resolution, while also restricting opportunities for newly registered IPs. To address these issues, the IBBI has proposed unified assignment caps, transitional restrictions, and regulatory amendments, inviting public comments to ensure wider participation in shaping the final framework.
Background and Context
The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to provide a time-bound framework for the resolution of financially distressed debtors, with the objective of maximising asset value. However, delays in resolution and liquidation processes continue to erode value and reduce recovery prospects for stakeholders. Insolvency Professionals play a pivotal role in ensuring the smooth conduct of processes, and overburdening of a few IPs has raised concerns regarding efficiency, quality, and equitable opportunities for the broader IP community.
Presently, under Clause 22 of the Code of Conduct in the IBBI (Insolvency Professionals) Regulations, 2016, an IP cannot take more than 10 assignments as a Resolution Professional (RP), with a sub-cap of three assignments involving admitted claims exceeding ₹1000 crore. This restriction, introduced in July 2021, applies only to RP roles, while no such cap exists for assignments undertaken as Interim Resolution Professional (IRP) or Liquidator.
Concerns and Need for Review
Analysis by IBBI shows that despite 4,527 registered IPs as of March 2025, a disproportionately large number of assignments are concentrated among a small group of professionals, some handling as many as 25 simultaneous cases. This has:
Created disparities in the distribution of work.
Raised questions about the quality and timeliness of resolution.
Limited opportunities for newly registered IPs.
Increased risks of process delays and stakeholder dissatisfaction.
Recognising these challenges, an Expert Committee recommended expanding the assignment cap to cover all key roles (IRP, RP, and Liquidator) to ensure more equitable workload distribution.
Proposed Regulatory Changes
The discussion paper proposes the following amendments:
Unified Assignment Cap – An IP shall not handle more than 10 assignments in aggregate as IRP, RP, and Liquidator, with a sub-limit of three cases involving admitted claims above ₹1000 crore.
Transitional Provision – IPs already handling 10 or more such assignments will not be eligible for new assignments until their caseload drops below the prescribed threshold.
Deletion of Clause 22 – The current clause in the Code of Conduct will be omitted and replaced with a new regulation (Regulation 7B), explicitly prescribing assignment limits.
Exclusions – For now, assignments as Resolution Professional/Bankruptcy Trustee in proceedings against Personal Guarantors to Corporate Debtors will not be covered by this cap, given that the framework is still evolving.
IPE Assignments – No assignment cap has been prescribed for Insolvency Professional Entities (IPEs) at this stage.
Invitation for Public Comments
IBBI has invited public comments on the proposals and the draft amendments to the IBBI (Insolvency Professionals) Regulations, 2016. Stakeholders, including Corporate Debtors, Creditors, IPs, Insolvency Professional Agencies (IPAs), academics, and investors, can submit comments electronically through the IBBI website by 1st September 2025.
👉 This proposed framework aims to promote equitable distribution of assignments, enhance accountability, strengthen time-bound processes under IBC, and create a level playing field for all insolvency professionals, especially new entrants to the ecosystem.
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