The Insolvency and Bankruptcy Board of India (IBBI) has come up with a circular dated 13 November 2020 to address the mistakes conducted by the insolvency professionals (IPs) in conduct of corporate insolvency resolution process (CIRP).
The Central Government has been steering deep economic reforms to make India a great place to do business. It has established a modern insolvency regime to revive companies in stress and thereby promoting competition and innovation at marketplace and enhancing entrepreneurship and credit availability in the economy.
The Insolvency and Bankruptcy Code, 2016 provides a time bound corporate insolvency resolution process for the revival of viable corporate debtors and closure of unviable ones. An IP is a key driver of CIRP. He acts as interim resolution professional in the initial days of CIRP and then as resolution professional till its completion. He runs the operations of the corporate debtors as going concern and assists the stakeholders to find out the best resolution plan, while protecting and preserving the value of assets of the corporate debtors and ensuring compliance with all the applicable laws to the business of the corporate debtors and the CIRP. The law facilitates and empowers the IP to discharge his responsibilities effectively.
The IBBI and Insolvency Professional Agencies (IPA) have come across certain mistakes being committed by some of the IPs in conduct of CIRPs. These mistakes are costs to the corporate debtors and the economy, and often amount to contravention of provisions of the law. Most of these are probably unintentional and can be avoided with a little more care and diligence. This communication by the IBBI on 13 November 2020 lists out a few such mistakes with a hope that these will not be committed by any IP, pre-empting the IBBI/IPA to initiate any disciplinary action.