Insolvency Professionals’ Role Critical In Resolution Of Distressed Assets, IBBI Says

India’s bankruptcy regulator said the insolvency professionals (IPs) play a critical part in the resolution of distressed corporate debtors and the role demand multi-disciplinary skills such as legal, managerial, and finance to perform their duties impeccably.

The stakeholders should ensure timely identification of stress, filing of applications and execution of the processes to ensure resolution as well as maximization of the value of corporate debtors’ assets, the Insolvency and Bankruptcy Board of India (IBBI) Chairperson Ravi Mital said at an event.

Mital delivered the address at the Insolvency Professionals’ Conclave in Chennai on 20 January, the IBBI, which recently issued the final list of IPs for 2023, said in a statement.

At the event, National Company Law Tribunal (NCLT) President Chief Justice (Retired) Ramalingam Sudhakar said the IPs should work efficiently in providing effective assistance to adjudicating authority for smooth execution of the processes.

The aspects of communication, agility and efficiency are key to the role of an IP, he added, noting that the insolvency professional agencies should take lead in implementing best practices in the insolvency profession.

Sameer Kakar, (Technical Member) at NCLT’s Chennai bench, said IPs should exercise abundant care and diligence in handling proceedings before the adjudicating authority in areas like filing of precise applications and resolving disputes amicably to avoid filling of undesirable interlocutory application before the authority.

Anita Shah Akella, joint secretary at the Ministry of Corporate Affairs (MCA), said several proactive and reactive reforms have been undertaken by the government and the IBBI to strengthen the insolvency regime since the passing of the Insolvency and Bankruptcy Code 2016.

To further strengthen the functioning of the IBC, the government is considering several changes to the code and has sought public comments by 7 February, Rajan Jain, deputy secretary (IBC) at the MCA, said recently.

The proposed changes to the IBC are related to the admission of the corporate insolvency resolution process (CIRP) applications, streamlining the insolvency resolution process, recasting the liquidation process, and the role of service providers under the code.

IBBI Whole-time Member Sudhaker Shukla said the proposed reforms in the discussion paper released by the MCA are aimed at achieving the objectives of the bankruptcy law.

The IBC has helped creditors recover a total of 2.43 lakh crore rupees ($29.95 billion) as of September 2022 through the CIRP since the inception of the inception of the bankruptcy law in December 2016.

The participation of women as IPs in India’s insolvency resolution landscape, however, has remained abysmally low even after five years of the IBC.

National E-Governance Services Ltd. Managing Director & Chief Executive Officer Debajyoti Ray Chaudhuri highlighted the importance of using the services of information utility for timely completion of the processes.

In its latest discussion paper on the IBC, the government has proposed increasing the reliance on record submitted with the information utilities during the admission process for speedy default verification and swift initiation of the CIRP.

The Insolvency Professionals’ Conclave was organized by the IBBI along with the three insolvency professional agencies, namely, the Indian Institute of Insolvency Professionals of ICAI (IIIPI), the ICSI Institute of Insolvency Professionals (ICSI IIP) and the Insolvency Professional Agency of Institute of Cost Accountants of India (IPAICAI).

(Note: $1 = 81.1306 Indian rupees)

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