December 1, 2021
Corporate Insolvency
The Insolvency and Bankruptcy Board of India (Board) is required under the Insolvency and Bankruptcy Code, 2016 (Code) to recommend name of an Insolvency Professional (IP) for appointment as Interim Resolution Professional (IRP) or Liquidator as under :
(a) Section 16(3)(a) of the Code requires the Adjudicating Authority (AA) to make a reference to the Board for recommendation of an IP, who may act as an IRP where an operational creditor has made an application for corporate insolvency resolution process (CIRP) and has not proposed an IRP. The Board is required under section 16(4) of the Code to recommend the name of an IP against whom no disciplinary proceedings are pending, within ten days of the receipt of the reference from the AA.
(b) Section 34(4) of the Code requires the AA to replace the resolution professional, if (a) the resolution plan submitted by the resolution professional under section 30 was rejected for failure to meet the requirements mentioned in section 30(2); or (b) the Board recommends the replacement of a resolution professional to the AA for reasons to be recorded in writing; or (c) the resolution professional fails to submit written consent under section 34(1). For the purposes of clause (a) and clause (c) of section 34(4), the AA may direct the Board under section 34(5) of the Code to propose the name of another IP to be appointed as a liquidator. The Board is required undersection 34(6)to propose the name of another IP along with written consent from him, within ten days of the direction issued by the AA under section 34(5).
- The Board has been making available Panels of IPs to the AA for appointment as IRP or Liquidator, as the case may be. Such Panels in advance by the Board has been found useful as indicated below:
(a) The AA, in its order dated January 8, 2018 in Innovsource Private Limited Vs. Getit Grocery Private Ltd., observed: “The Insolvency and Bankruptcy Board of India vide its letter dated 01.01.2018 has recommended a Panel of Insolvency Professionals for appointment of Insolvency Resolution Professional in compliance with Section 16 (3) (a) of the Code in order to cut delay. The list of recommended Insolvency Professionals provides instant solution to the Adjudicating Authority to pick up the name and make appointment. It helps in meeting the time line given in the Code and the unnecessary time wasted firstly in asking the Insolvency and Bankruptcy Board of India to recommend the name and then to appoint such Interim Resolution Professional by the Adjudicating Authority”.
(b) The NCLAT, in its order dated February 28, 2019 in Sandeep Kumar Gupta, Resolution Professional Vs. Stewarts & Lloyds of India Ltd. & Anr., Observed: “ .. Further, the list of ‘Resolution Professionals’ being made available by the ‘Board’ to the Adjudicating Authorities, any person is appointed out of the said list submitted by the ‘Board’, it should be treated to be an appointment of ‘Resolution Professional’/‘Liquidator’ on the recommendation of the ‘Board’.”
Individual Insolvency
- The Board is also required under the Code to recommend the name of an IP for appointment as resolution professional (RP) or bankruptcy trustee (BT) as under:
(a) Section 97(3) of the Code requires the AA to direct the Board to nominate a resolution professional (RP) for an insolvency resolution process, where an application under section 94 or 95 is filed by the debtor or the creditor, as the case may be, and not through a RP. The Board is required undersection 97(4) to nominate a RP within ten days of the receiving the direction from the AA under Section 97(3).
(b) Section 98(2) of the Code requires the AA to make a reference to the Board for replacement of a RP in an insolvency resolution process, where in pursuance of Section 98(1), the debtor or the creditor is of the opinion that the RP appointed under section 97 is required to be replaced. The Board is required under section 98(3) to recommend the name of an RP, against whom no disciplinary proceedings are pending, within ten days of the receipt of the reference from the AA under Section 98(2)
(c) Section 125(3) of the Code requires the AA to direct the Board to nominate a bankruptcy trustee (BT) for the bankruptcy process, where a BT is not proposed by the debtor or creditor under section 122 or 123. The Board is required under section 125(4) to nominate a BT, within ten days of receiving the direction of the AA under Section 125(3).
(d) Section 146(2) of the Code requires the AA to direct the Board for replacement of the BT on his resignation in a bankruptcy process. The Board is required under section 146(3) to recommend another BT as a replacement, within ten days of the direction of the AA under Section 146(2).
(e) Section 147(2) of the Code requires the AA to direct the Board for replacement of a BT in a bankruptcy process in the event of occurrence of a vacancy in the office of the BT for any reason other than his/her replacement or resignation. The Board is required under section 147(3) to recommend a BT as a replacement, within ten days of the direction of the AA under section 147(2).
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