BY- KUNAL AHUJA
FROM VIVEKANANDA INSTITUTE OF PROFESSIONAL STUDIES
Who is an insolvency professional?
An insolvency professional is an individual appointed under insolvency and bankruptcy code, 2016 who has the authority to act with respect to a corporate debtor, insolvent individual or partnership in case of insolvency proceedings.
Insolvency professional is one of the key pillars of the insolvency and bankruptcy code who is vested with the power of taking charge over the entire management and business of the company undergoing insolvency proceedings. Insolvency professional is appointed by the insolvency professional agencies after obtaining the license from the insolvency and bankruptcy board of India, an insolvency professional is assigned with the functions of interim resolution professional/ final resolution professional provided under this act.
Functions of insolvency professional
There are multifold functions which are to be performed by the insolvency professional-
- Rescue a business under insolvency
- Taking over the entire management of the company
- Managing the assets of the corporate debtor under its custody
- Taking care of multiple locations of registered office, diverse branches, and operating units
- Receive claims within 14 days of appointment
- Collation and verification of all the claims to be done within 7 days of receiving
- Prioritise the interest of financial and operational creditors
- Address the demands of various creditors
- Act as an intermediary between the corporate debtor/financial creditors and adjudicating authorities
Insolvency resolution
For viability of the credit market insolvency resolution is adopted which entails the maximization of the value of the assets of the corporate debtor and providing assurance to the stakeholders, financial and operational creditors.
Insolvency Professional appointed by the Insolvency Board of India is responsible for the due process of Insolvency Resolution. All the crucial functions of Resolution Professional constituting of-
For viability of the credit market insolvency resolution is adopted which entails the maximization of the value of the assets of the corporate debtor and providing assurance to the stakeholders, financial and operational creditors.
Insolvency Professional appointed by the Insolvency Board of India is responsible for the due process of Insolvency Resolution. All the crucial functions of Resolution Professional constituting of-
- Managing and leading the business of the corporate debtor
- Representing in the legal proceedings on behalf of the corporate debtor, whether under National Company Law Tribunal or any other adjudicating authority
- Preparation of periodic reports for the NCLT and Committee of Creditors (COC)
- Evaluation of the resolution proposals, identification of the resolution applicants
- Provide data rooms
- Process of due diligence
- Providing consultation to the committee of creditors to being a consensus for determining the vibrant resolution plan etc
Obligations of Insolvency Professional
Under section 206 every Individual to perform the functions as Insolvency Professional has to get enrolled with the Insolvency Professional Agency and registered under the Insolvency and Bankruptcy Board of India.
As per section 208(2) of insolvency and bankruptcy code, 2016 every Insolvency Professional have to-
Take reasonable care and diligently follow his duties
Comply with all the terms mentioned in the bye-laws of Insolvency agency under which he is registered.
Allow the inspection of his records by his Insolvency agency anytime
Submit the copy of records, before the adjudicating authority, of every proceeding to the Insolvency and Bankruptcy Board of India as well as Insolvency Agency with which he is enrolled.
Carry out every function in such manner and subject to such conditions as may be specified
Punishment of Insolvency professional
Under section 220 of code If an Insolvency Professional contravenes with any of the provisions or obligations under this code any of the following actions can’t be taken against him/her
Suspension or cancellation of registration
Imposition of penalty which may extend up to three times the amount of loss suffered by the person or three times the amount of unlawful gain to the Insolvency Professional
How to become an Insolvency professional?
To enroll as an Insolvency Professional an individual has to qualify the eligibility criteria set under insolvency and bankruptcy code, 2016.
Insolvency Professional must be of the age not less than 18 years of age i.e. should be a major
There are following ways to get enrolled as an Insolvency Professional provided the individual qualifies the eligibility criteria.
An individual can become an Insolvency Professional by appearing for Limited Insolvency Examination only when that individual has 10 years experience as-
A Chartered Accountant registered under Institute of Chartered Accountants of India
A company secretary registered under Institute of Company Secretaries of India
Cost Accountant registered under Institute of Cost Accountants of India
An Advocate enrolled with Bar Council
An individual can be appointed as an Insolvency professional for limited period or as interim Insolvency Professional if he/she has experience of 15 years as-
A Chartered Accountant registered under Institute of Chartered Accountants of India
A Company Secretary registered under the Institute of company secretaries of India
Cost accountant registered under Institute of Cost Accountants of India
An Advocate enrolled with Bar Council
Any person who is a qualified Chartered Accountant, Company Secretary, Cost Accountant or Advocate has been in practice for not less than 15 years of a time period can apply for registration as an Insolvency Professional for a limited time period. The applicant has to submit the application fee of Rs. 5000 along with the application. And once the time period for which the Insolvency Professional was appointed expires, that individual cannot take any assignment as Insolvency professional.
- Insolvency Professional must be a Resident of India
- Insolvency professional must not have been convicted by any competent court of any offense involving moral turpitude or any offense punishable with imprisonment for a term exceeding six months, and a period of five years has not elapsed from the date of expiry of the punishment.
- No person who has been convicted of any offense and sentenced to imprisonment for a period of seven years or more is eligible to be enrolled as insolvency professional under IBC.
- Any person who has been an undischarged insolvent or has applied to be adjudicated as an insolvent cannot be registered as insolvency professional.
- Insolvency professional must of sound mind.
- He shall be fit and proper for which he has to qualify following criteria
- He must be a person of Integrity.
- He must hold good reputation and character.
- He must be competent
- He must be financially sound.
Procedure to become an Insolvency Professional
There are following ways to get enrolled as an Insolvency Professional provided the individual qualifies the eligibility criteria.
National Insolvency Examination
To become an Insolvency Professional an eligible individual can appear for national insolvency examination set by Insolvency Board of India. Any individual appearing for this examination does not necessarily require any prerequisite experience unless Insolvency Board of India officially announce.
To become an Insolvency Professional an eligible individual can appear for national insolvency examination set by Insolvency Board of India. Any individual appearing for this examination does not necessarily require any prerequisite experience unless Insolvency Board of India officially announce.
Limited Insolvency Examination
An individual can become an Insolvency Professional by appearing for Limited Insolvency Examination only when that individual has 10 years experience as-
A Chartered Accountant registered under Institute of Chartered Accountants of India
A company secretary registered under Institute of Company Secretaries of India
Cost Accountant registered under Institute of Cost Accountants of India
An Advocate enrolled with Bar Council
Limited period registration
An individual can be appointed as an Insolvency professional for limited period or as interim Insolvency Professional if he/she has experience of 15 years as-
A Chartered Accountant registered under Institute of Chartered Accountants of India
A Company Secretary registered under the Institute of company secretaries of India
Cost accountant registered under Institute of Cost Accountants of India
An Advocate enrolled with Bar Council
Direct Registration
Any person who is a qualified Chartered Accountant, Company Secretary, Cost Accountant or Advocate has been in practice for not less than 15 years of a time period can apply for registration as an Insolvency Professional for a limited time period. The applicant has to submit the application fee of Rs. 5000 along with the application. And once the time period for which the Insolvency Professional was appointed expires, that individual cannot take any assignment as Insolvency professional.
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