Role, Functions and Duties of IP/IRP/RP

Number of Assignments

According to Regulation 7B of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, an insolvency professional who is not an insolvency professional entity, shall not at any point of time, have more than ten assignments in aggregate as interim resolution professional and resolution professional in a corporate insolvency resolution process and as a liquidator in a liquidation process, of which not more than three assignments shall have admitted claims exceeding one thousand crore rupees each:

Provided that an insolvency professional who is not an insolvency professional entity, already holding more such assignments than the limit specified in this regulation on the date of commencement of Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2025, shall not accept any such new assignment until the number of his ongoing assignments falls below the limit specified in this regulation.”

Current Assignments: 3+2+2 = 7 (Maximum 10 assignments allowed)

Large Assignments: admitted claims >1000 Crore is 2 (maximum 3 such assignment allowed)

Scenario A: - to act as RP for new three companies, admitted claims of ₹ 750, 850 & 950 Crore, therefore total assignments = 7+3 = 10 is within the limit, and Large Assignments remains 2 (i.e., not more than 3) within the maximum limit, hence new assignments from T group can be accepted.

Scenario B: - to act as Liquidator for new three companies with admitted claims of ₹ 900, 950, 1050 Crore, therefore, total assignments =7+3=10 within the limit, and Large Assignments 2+1=3 (i.e., not more than 3), within the maximum limit, hence new assignments from R group can be accepted.

Scenario C: - to act as Liquidator for new two companies with admitted claims of ₹ 1050, 1100 Crore, therefore, total assignments = 7+2=9 within the limit, and Large Assignments 2+2=4 (i.e., more than 3), not within the maximum limit, hence new assignments from U group cannot be accepted.

Therefore, any of the offer from Scenario A or B, can be accepted.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 5(c) (Syllabus 2022).

Assessment of Compromise or Arrangement

Regulation 39BA(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 states that while deciding to liquidate the corporate debtor under section 33, the committee shall examine whether to explore compromise or arrangement as referred to in Regulation 2B(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 and the resolution professional shall submit the committee’s recommendation to the Adjudicating Authority while filing application under section 33.

Where a recommendation has been made as specified above, the resolution professional and the committee shall keep exploring the possibility of compromise or arrangement during the period the application to liquidate the corporate debtor is pending before the Adjudicating Authority.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 6(b) (Syllabus 2022).

Directions for compliances of restrictions

Section 90 of the Insolvency and Bankruptcy Code, 2016 provides that resolution Professional may apply to the adjudicating authority for any of the following directions, namely:

(a)Compliance of any restrictions referred to in sub-section (3) of Section 85 in case of noncompliance by the debtor; or

(b)Compliance of the duties of the debtor referred to in section 88, in case on noncompliance by the debtor.

The Resolution Professional may apply to the adjudicating authority for directions in relation to any other matter under these provisions for which no specific provisions have been made.

Section 91 of the Insolvency and Bankruptcy Code, 2016 provides that the Resolution Professional may submit an application to the adjudicating authority seeking revocation of its order made under Section 84 on the following grounds, namely:

(a)if due to any change in the financial circumstances of the debtor, the debtor is ineligible for a fresh start process; or

(b)non-compliance by the debtor of the restrictions imposed under sub-section (3) of section 85; or

(c)if the debtor has acted in a mala fide manner and has willfully failed to comply with the provisions of this Chapter.

The adjudicating authority shall within fourteen days of the receipt of the application, may by order admit or reject the application. On passing of the order admitting the application, the moratorium and the fresh start process shall cease to have effect. A copy of the order passed by the Adjudicating Authority under this Section shall be provided to the Board for the purpose of recording an entry in the register referred to in Section 196.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 4(d) (Syllabus 2017).

Moratorium also applies on the Regulatory Authorities: In the matter of Ms. Anju Agarwal Resolution Professional for Shree Bhawani Paper Mills Ltd. Vs Bombay Stock 19 Exchange & Ors., the NCLAT observed that Section 28A of the SEBI Act, 1992 being inconsistent with Section 14 of IBC, it held that Section 14 of IBC will prevail over Section 28A of the SEBI Act, 1992 and SEBI cannot recover any amount including the penalty from the Corporate Debtor (CD). The ‘Bombay Stock Exchange’ cannot suspend trading of shares of CD for the same reason.

Penalty imposed by Regulator may be claimed as Operational Creditor but cannot be recovered during the Resolution Process: In the matter of Maharashtra Seamless Ltd. Vs. Shri Padmanabhan Venkatesh & Ors., the NCLAT held that the statutory dues i.e. the dues to Central Government or the State Government arising under any law for the time being in force and payable come within the meaning of ‘Operational Debt’.

If penalty is imposed or amount is payable to the ‘Securities Exchange Board of India’ in such case, it may claim as an ‘Operational Creditor’ but cannot recover the same during the ‘Resolution Process’.

Thus, the Bombay Stock exchange cannot recover the amount of penalty against a company undergoing insolvency proceedings.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 5(a) (Syllabus 2022).

Section 3(21) of the IBC, 2016 defines an “information utility” as a person who is registered with the Board as an information utility under section 210.

While the Insolvency professionals assist in the insolvency resolution proceedings envisaged in the Code, the Information Utility, on the other hand, collect, collate, authenticate and disseminate financial information. The purpose of such collection, collation, authentication and dissemination financial information of debtors is to facilitate swift decision making in the resolution proceedings. The Insolvency and Bankruptcy Board of India oversees the functioning of such information utilities. The Insolvency and Bankruptcy Board of India has framed the IBBI (Information Utilities) Regulations, 2017. These regulations are amended from time to time by the Insolvency and Bankruptcy Board of India.

Obligations of information utility (Section 214 of IBC, 2016)

(a)create and store financial information in a universally accessible format;

(b)accept electronic submissions of financial information from persons who are under obligations to submit financial information under sub-section (1) of section 215, in such form and manner as may be specified by regulations;

(c)accept, in specified form and manner, electronic submissions of financial information from persons who intend to submit such information;

(d)meet such minimum service quality standards as may be specified by regulations;

(e)get the information received from various persons authenticated by all concerned parties before storing such information;

(f)provide access to the financial information stored by it to any person who intends to access such information in such manner as may be specified by regulations;

(g)publish such statistical information as may be specified by regulations;

(h)have inter-operatability with other information utilities.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 6(b) (Syllabus 2022).

Regulation 20 of the Corporate Insolvency Resolution Process Regulations deals with Service of notice by electronic means and states that: -

A notice by electronic means may be sent to the participants through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link or Uniform Resource Locator for accessing such notice.

The subject line in e-mail shall state the name of the corporate debtor, the place, if any, the time and the date on which the meeting is scheduled.

If notice is sent in the form of a non-editable attachment to an e-mail, such attachment shall be in the Portable Document Format or in a non-editable format together with a ‘link or instructions’ for recipient for downloading relevant version of the software.

When notice or notifications of availability of notice are sent by an e-mail, the resolution professional shall ensure that it uses a system which produces confirmation of the total number of recipients e-mailed and a record of each recipient to whom the notice has been sent and copy of such record and any notices of any failed transmissions and subsequent re-sending shall be retained as ‘‘proof of sending”.

The obligation of the resolution professional shall be satisfied when he transmits the e-mail and he shall not be held responsible for a failure in transmission beyond its control.

The notice made available on the electronic link or Uniform Resource Locator shall be readable, and the recipient should be able to obtain and retain copies and the resolution professional shall give the complete Uniform Resource Locator or address of the website and full details of how to access the document or information.

If a participant, other than a member of the committee, fails to provide or update the relevant e-mail address to the resolution professional, the non-receipt of such notice by such participant of any meeting shall not invalidate the decisions taken at such meeting.

In view of above provisions, If Mr. Goswami, failed to provide or update the relevant e-mail address to the resolution professional, the non-receipt of such notice by Mr. Goswami of any meeting shall not invalidate the decisions taken at such meeting.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 6(d) (Syllabus 2022).

According to section 54H of the Code, during the pre-packaged insolvency resolution process period, -

(a)The management of the affairs of the body corporate shall continue to vest in the Board of Directors or the partners, as the case may be, of the corporate debtor, subject to such conditions as may be prescribed.

(b)The Board of Directors, as the case may be, of the corporate debtor, shall make every endeavour to protect and preserve the value of property of the corporate debtor, and manage its operations as a going concern and

(c)the promoters, members, personnel and partners as the case may be, of the corporate debtor shall exercise and discharge their contractual or statutory rights and obligations in relation to the corporate debtor, subject to the provisions of this chapter and such other conditions and restrictions as may be prescribed.

Vesting management of corporate debtor with resolution professional (Section 54J of IBC, 2016)

Section 54J (1) provides that where the committee of creditors, at any time during the pre-packaged insolvency resolution process period, by a vote of not less than sixty-six per cent of the voting shares, resolves to vest the management of the corporate debtor with the resolution professional, the resolution professional shall make an application for this purpose to the Adjudicating Authority, in such form and manner as may be specified.

Section 54J (2) of the Code provides that on an application made under sub-section(1), if the Adjudicating Authority is of the opinion that during the pre-packaged insolvency resolution process

(a)the affairs of the corporate debtor have been conducted in a fraudulent manner; or

(b)there has been gross mismanagement of the affairs of the corporate debtor, it shall pass an order vesting the management of the corporate debtor with the resolution professional.

Section 54J (3) provides that notwithstanding anything to the contrary contained in this chapter, the provisions of:

(a)sub-sections (2) and (2A) of section 14 (moratorium)

(b)section 17 (Management of affairs of corporate debtor by IRP)

(c)clauses (e) to (g) of section 18 (Duties of IRP)

(d)sections 19 and 20 (Personnel to extend co-operation to IRP and management of operations of corporate debtor as going concern)

(e)sub-section (1) of section 25 (Duty of RP to preserve clauses (a) to (c) and clause (k) of subsection (2) of section 25 (duties of RP) and section 28 (Approval of COC for certain actions) shall, mutatis mutandis applies, to the proceedings under this chapter, from the date of the order under sub-section (2), until the pre-packaged insolvency resolution process period comes to an end.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 6A(ii) (Syllabus 2022).

Section 27 provides that a resolution professional may be replaced at any time during the corporate insolvency resolution process by the committee of creditors by a sixty-six percent majority of voting shares.

Section 27 of the Code reads as follows:

(1)Where, at any time during the corporate insolvency resolution process, the committee or creditors is of the opinion that a resolution professional appointed under section 22 is required to be replaced, it may replace him with another resolution professional in the manner provided under this section.

(2)The committee of creditors may, at a meeting, by a vote of sixty-six per cent of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form.

(3)The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority.

(4)The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a resolution professional shall be appointed in the same manner as laid down in section 16.

(5)Where any disciplinary proceedings are pending against the proposed resolution professional under subsection (3), the resolution professional appointed under section 22 shall continue till the appointment of another resolution professional under this section.”

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 5(a) (Syllabus 2017).

Regulation 3 of the IBBI ((Liquidation Process) Regulations, 2016 provides for eligibility for appointment as a liquidator. According to it, an insolvency professional shall be eligible to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director is independent of the corporate person.

Explanation:

(1)A person shall be considered independent of the corporate person, if he

(a)is eligible to be appointed as an independent director on the board of the corporate person under section 149 of the Companies Act, 2013, where the corporate person is a company;

(b)is not a related party of the corporate person; or

(c)has not been an employee or proprietor or a partner

(i)of a firm of auditors or secretarial auditors or cost auditors of the corporate person; or

(ii)of a legal or a consulting firm, that has or had any transaction with the corporate person contributing ten per cent or more of the gross turnover of such firm,

at any time in the last three years.

(2)An insolvency professional shall not be eligible to be appointed as a liquidator if he, or the insolvency professional entity of which he is a partner or director is under a restraint order of the Board.

(3)A liquidator shall disclose the existence of any pecuniary or personal relationship with the concerned corporate person or any of its stakeholders as soon as he becomes aware of it, to the Board and the Registrar.

(4)An insolvency professional shall not continue as a liquidator if the insolvency professional entity of which he is a director or partner, or any other partner or director of such insolvency professional entity represents any other stakeholder in the same liquidation.

For being eligible to become a liquidator, Mr. S shall first be an insolvency professional. As question is silent whether he is an insolvency professional or not, even if it is assumed that he is an insolvency professional still Mr. S is not eligible to be appointed as a liquidator in the question as he was a secretarial auditor of M/s. C Ltd. till 31st March 2022 i.e. within last three financial years.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 5(c) (Syllabus 2017).

The facts of the present case are similar to that of Edelweiss Asset Reconstruction Company Ltd. v. Bharati Defence and Infrastructure Ltd, wherein the Resolution Professional (RP) filed an application seeking approval of the resolution plan submitted by a resolution applicant, who is a Financial Creditor with 82.7% voting share in the CoC. The plan provided that the resolution applicant will sell the corporate debtor in two years. NCLT, Mumbai Bench noted that the plan does not give due consideration to the interest of all stakeholders, seeks several exemptions, and contains a lot of uncertainties and speculations. It provides for generation of income from ongoing operations and no upfront money is brought in by the resolution applicant. The NCLT Bench also noted that the resolution applicant has proposed to hold majority equity in the corporate debtor, run its operations, enhance its value and over a period endeavour to find a suitable investor/buyer for the same.

Relying on the judgment in the matter of Binani Industries Limited , the NCLT Bench observed: “.... resolution plan is for insolvency resolution of the Corporate Debtor as a going concern and not for the addition of value and intended to sale the corporate debtor”. It observed that resolution applicant is essentially extending the CIRP period to find an investor, which is not the intention of the legislature. It further observed: “if the ultimate object in the resolution plan is to sell the company, then it can be achieved by sale as a going concern during the liquidation process”. Accordingly, it rejected the resolution plan and ordered for liquidation.

Thus, it can be concluded that the resolution plan will not be approved by NCLT .

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 6(a) (Syllabus 2022).

Section 3(21) of the Insolvency & Bankruptcy Code defines an “information utility” as a person who is registered with the Board as an information utility under section 210.

While the Insolvency professionals assist in the insolvency resolution proceedings envisaged in the Code, the Information Utility, on the other hand, collect, collate, authenticate and disseminate financial information The purpose of such collection, collation, authentication and dissemination financial information of debtors is to facilitation swift decision making in the resolution proceedings. The Insolvency and Bankruptcy Board of India has framed the IBBI (Information Utilities) Regulations, 2017.

Obligations of information utility (Section 214)

For the purposes of providing core services to any person, every information utility shall- –

(a)create and store financial information in a universally accessible format;

(b)accept electronic submissions of financial information from persons who are under obligations to submit financial information under sub-section (1) of section 215, in such form and manner as may be specified by regulations;

(c)accept, in specified form and manner, electronic submissions of financial information from persons who intend to submit such information;

(d)meet such minimum service quality standards as may be specified by regulations;

(e)get the information received from various persons authenticated by all concerned parties before storing such information;

(f)provide access to the financial informa tion stored by it to any person who intends to access such information in such manner as may be specified by regulations;

(g)publish such statistical information as may be specified by regulations;

(h)have inter-operatability with other information utilities.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 6(c) (Syllabus 2022).

Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 makes provisions for the examination and registration of Insolvency Professionals who can be appointed as an Interim Resolution Professional (IRP), Resolution Professional (RP), Liquidator or Voluntary Liquidator under relevant regulations.

According to Regulation 4 of the IBBI (Insolvency Professionals) Regulations, 2016, no individual shall be eligible to be registered as an insolvency professional if he -

a)is a minor;

b)is not a person resident in India;

c)does not have the qualification and experience specified in regulations 5 or 9 of the IBBI (Insolvency Professionals) Regulations, 2016, as the case may be;

d)has been convicted by any competent court for an offence punishable with imprisonment for a term exceeding six months or for an offence involving moral turpitude, and a period of five years has not elapsed from the date of expiry of the sentence. Provided that, if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be registered;

e)he is an undischarged insolvent, or has applied to be adjudicated as an insolvent;

f)he has been declared to be of unsound mind; or

g)he is not a fit and proper person.

Explanation: For determining whether an individual is fit and proper under these Regulations, the Board may take account of any consideration as it deems fit, including but not limited to the following criteria-

i)integrity, reputation and character;

ii)absence of convictions and restraint order; and

iii)competence, including financial solvency and net worth.

No insolvency professional entity, recognised by the Board under regulation 13 shall be eligible to be registered as an insolvency professional, if the entity and/or any of its partner or director, as the case may be, is not fit and proper person.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 6A(iii) (Syllabus 2017).

In the case of Punjab National Bank Vs. Mr. Kirah Shah , Interim Resolution Professional of ORG Informatics Ltd. [CA (AT) (Ins) No. 749/2019]-NCLAT held that the Committee of Creditors is not required to record any reason for replacing the RP that may otherwise call for proceedings against such Resolution Professional. Having decided to remove the Resolution Professional with 88 percent of the voting share, the decision of Committee of Creditors was not open to the AA interfering with such decision, till it is shown that the decision of the Committee of Creditors is perverse or without jurisdiction.

Further in case of Bank of India vs. M/s Nithin Nutrition Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 497 of 2020 (with connected appeals)]-NCLAT observed that neither section 22 nor section 27 of the IBC requires the Committee of Creditors to give any reasons. The reason is that the relationship between the RP and the Committee of Creditors is that of confidence. If there is loss of confidence and the RP continues in the role, the corporate debtor would be put to loss because of the bad relationship between the Interim Resolution Professional/RP and the Committee of Creditors NCLAT held that the Committee of Creditors has the requisite powers to propose changing the Interim Resolution Professional even in meeting/s subsequent to the first one and there is no requirement that they should give particular reasons for the change

Therefore, appointment of RP is valid/proper and Adjudicating Authority cannot reject the application.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 5(d) (Syllabus 2022).

The functions and obligations of Insolvency Professional has been enumerated under Section 208

(1)of Insolvency and Bankruptcy Code, 2016 are as under:

(1)Where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated, it shall be the function of an insolvency professional to take such actions as may be necessary, in the following matters, namely: –

(a)a fresh start order process under Chapter II of Part III;

(b)individual insolvency resolution process under Chapter III of Part III;

(c)corporate insolvency resolution process under Chapter II of Part II;

(a)(ca) pre-packaged insolvency resolution process under Chapter III-A of Part II;

(d)individual bankruptcy process under Chapter IV of Part III; and

(e)liquidation of a corporate debtor firm under Chapter III of Part II.

(1A) Where the name of the insolvency professional proposed to be appointed as a resolution professional, is approved under clause (e) of sub-section (2) of section 54A, it shall be the function of such insolvency professional to take such actions as may be necessary to perform his functions and duties prior to the initiation of the pre-packaged insolvency resolution process under Chapter III-A of Part II.

(2)Every insolvency professional shall abide by the following code of conduct: –

(a)to take reasonable care and diligence while performing his duties;

(b)to comply with all requirements and terms and conditions specified in the bye-laws of the insolvency professional agency of which he is a member;

(c)to allow the insolvency professional agency to inspect his records;

(d)to submit a copy of the records of every proceeding before the Adjudicating Authority to the Board as well as to the insolvency professional agency of which he is a member; and

(e)to perform his functions in such manner and subject to such conditions as may be specified.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 6A(iii) (Syllabus 2022).

As per section 24(3)(b) of Insolvency and Bankruptcy Code, 2016, the resolution professional shall give notice of each meeting of the committee of creditors to members of the suspended Board of Directors or the partners of the corporate persons, as the case may be. As per provision of section 24(4) the directors, as referred to in subsection (3)(b), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings.

In the matter of Vijay Kumar Jain vs. Standard Chartered Bank and others , an appeal was filed with Supreme Court against orders rejecting the prayer of an erstwhile director for getting copy of the resolution plans from the Resolution Professional. Both the NCLT and NCLAT ruled that appellant had no right to receive the resolution plans and the Resolution Professional has contended that only the members of CoC are entitled to have resolution plans, as per Section 30(3) IBC read with Regulation 39(2) of CIRP Regulations.

The Supreme Court expressly rejected the argument based on relying on notes on clauses of section 24 of the code and held that every participant is entitled to a notice of every meeting of the committee of creditors. Such notice of meeting must contain an agenda of the meeting, together with the copies of all documents relevant for matters to be discussed and the issues to be voted upon at the meeting vide Regulation 21(3)(iii). Obviously, resolution plans are “matters to be discussed” at such meetings, and the erstwhile Board of Directors are “participants” who will discuss these issues.”

It was held that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of “documents” that have to be furnished along with the notice of such committee of creditor (CoC) meetings.

The Judgement also clarified that the resolution professional can take an undertaking from the erstwhile director to maintain confidentially of the information.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 5(e) (Syllabus 2017).

As per Section 27 of the Insolvency & Bankruptcy Code 2016:

(1)Where, at any time during the corporate insolvency resolution process, the committee or creditors is of the opinion that a resolution professional appointed under section 22 is required to be replaced, it may replace him with another resolution professional in the manner provided under this section.

(2)The committee of creditors may, at a meeting, by a vote of sixty-six per cent of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form.

(3)The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority.

(4)The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a resolution professional shall be appointed in the same manner as laid down in section 16.

(5)Where any disciplinary proceedings are pending against the proposed resolution professional under sub-section (3), the resolution professional appointed under section 22 shall continue till the appointment of another resolution professional under this section.

Hence, approval of 66% voting rights shares of CoC is required for replacing the resolution professional. So, Mr. B cannot be removed as RP with CoC passing resolution constituting 55% voting shares.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 6(c) (Syllabus 2017).

According to Section 18 of the Insolvency and Bankruptcy Code the following assets shall not include, namely: -

(a)assets owned by a third party in possession of the corporate debtor held under trust or under contractual

arrangements including bailment;

(b)assets of any Indian or foreign subsidiary of the corporate debtor; and

(c)such other assets as may be notified by the Central Government in consultation with any financial sector

regulator.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 5(c) (Syllabus 2017).

According to Section 15 of the Insolvency and Bankruptcy Code, the public announcement of the corporate insolvency resolution process shall contain the following information, namely: –

(a)name and address of the corporate debtor under the corporate insolvency resolution process;

(b)name of the authority with which the corporate debtor is incorporated or registered; (c) the last date for

submission of claims, as may be specified;

(d)details of the interim resolution professional who shall be vested with the management of the corporate

debtor and be responsible for receiving claims;

(e)penalties for false or misleading claims; and

(f)the date on which the corporate insolvency resolution process shall close, which shall be the one hundred

and eightieth day from the date of the admission of the application under sections 7, 9 or section 10, as the case may be.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 6(c) (Syllabus 2017).

As per Regulation 18 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2022, a Resolution Professional (RP) may convene a meeting if he considers it necessary, on a request received from members of the committee and shall convene a meeting if the same is made by members of the committee representing at least 33% per cent of the voting rights.

A resolution professional may place a proposal received from members of the committee in a meeting, if he considers it necessary and shall place the proposal if the same is made by members of the committee representing at least 33% of the voting rights.

Further, a meeting of the committee shall be called by giving not less than five days’ notice in writing to every participant, at the address it has provided to the resolution professional and such notice may be sent by hand delivery, or by post but in any event, be served on every participant by electronic means. The committee may reduce the notice period from five days to such other period of not less than twenty-four hours, as it deems fit, however, if there is any authorised representative, the committee may reduce the period to not less than forty-eight hours. (Regulation 19 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016).

Considering the above provisions, the RP has violated the provisions of the Code since he has called the meeting based on the request received from the CoC members holding less than 33% voting rights and the notice for the meeting is also less than 24 hours.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 4(c) (Syllabus 2017).

As per the relevant applicable provisions of the Insolvency and Bankruptcy Code, 2016, status of the following resolution is as under:

2.Replacement of the Resolution

4.Withdrawal of CIRP u/s 12A of the Insolvency & Bankruptcy Code, 2016 85% Not approved

5.Appointment of technical consultant to assist the Resolution Professional 56% Approved

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 4(d) (Syllabus 2017).

Section 17(2)(e) of the Insolvency & Bankruptcy Code mandates the Insolvency Resolution Professional( IRP) / Resolution Professional (RP) to comply with the requirements under any law for the time being in force on behalf of the Corporate Debtor (CD). Any non-compliance has a cost to the CD and its stakeholders and attracts penal consequences. For example, a listed company has several continuing obligations under the securities laws. Failure to discharge these obligations compromises the interests of investors in securities. This amounts to contravention not only of securities laws, but also of the provisions of the Code. The IRP/RP is responsible for the non-compliance of the provisions of the applicable laws if it is on account of his conduct. There are, however, instances where an IRP/RP failed to comply with requirements of various laws. This reflects lack of competence and professionalism of the IP, compromises the interests of stakeholders, and burdens the CD with the liabilities for failure of the IP to make compliances.

Therefore, the statement made by Ram is not in accordance with the Code.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 5(b) (Syllabus 2017).

According to section 5(13) of the Insolvency and Bankruptcy Code, the "insolvency resolution process costs" means: -

(a)the amount of any interim finance and the costs incurred in raising such finance;

(b)the fees payable to any person acting as a resolution professional;

(c)any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern;

(d)any costs incurred at the expense of the Government to facilitate the insolvency resolution process; and

(e)any other costs as may be specified by the Board.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 5(c) (Syllabus 2017).

The insolvency professional occupies a pivotal position and acts as an intermediary between the corporate debtor & creditor on one hand and the Adjudicating Authority on the other and functions under the watchful eyes of the Agency and the Insolvency Bankruptcy Board of India. This is a position of trust and confidence.

In terms of work, the insolvency professional has to carry a heavy work workload - secretarial, legal, finance, management of business of debtor, valuation and sale of assets etc., fall under the care of the insolvency professional. This calls for the insolvency professional to be more than adequate knowledge in the field of human relations, finance, taxation etc.

It goes without saying that the more endowed and equipped is the better are the chances of the resolution of the insolvency. An insolvency process cannot be imagined without the active involvement of an insolvency professional who is in many respects, the lynch pin of the same. He does play a central role and assumes many diverse functions like stakeholder management, business dynamics, strategic foresight, business resolution etc. It is therefore rightly said that the success of the insolvency/bankruptcy case primarily depends on the professional attending it.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 6(a) (Syllabus 2017).

AG cannot continue as a resolution professional if the insolvency professional entity of which he is a director or a partner, or any other partner or director of such insolvency professional entity represents any other stakeholders in the same corporate insolvency resolution process.

As per Regulation 3 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016-An insolvency professional shall be eligible to be appointed as a resolution professional for the insolvency resolution if he, and all partners and directors of the insolvency professional entity of which he is a partner or director, are independent of the corporate debtor.

Explanation - A person shall be considered independent of the corporate debtor, if he -

(a)is eligible to be appointed as an independent director on the board of the corporate debtor under section 149 of the Companies Act, 2013, where the corporate debtor is a company;

(b)is not a related party of the corporate debtor; or

(c)has not been an employee or proprietor or a partner:-

(i)of a firm of auditors or secretarial auditors in practice or cost auditors of the corporate debtor; or

(ii)of a legal or a consulting firm, that has or had any transaction with the corporate debtor amounting to five per cent or more of the gross turnover of such firm,

in the last three financial years.

(2)An insolvency professional shall not be eligible to be appointed as a resolution

professional if he, or the insolvency professional entity of which he is a partner or director, is under a restraint order of the Board.

(3)An insolvency professional shall not continue as a resolution professional if the

insolvency professional entity of which he is a director or a partner, or any other partner or director of such insolvency professional entity represents any other stakeholders in the same corporate insolvency resolution process.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 6(c) (Old syllabus).

Section 30(2) of the Insolvency and Bankruptcy Code, 2016 provides that the resolution professional shall examine each resolution plan received by him to confirm that each resolution plan -

(a)provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor;

(b)provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than:

(i)the amount to be paid to such creditors in the event of a liquidation of a corporate debtor under section 53; or

(ii)the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53,

Whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor.

Explanation 1 : For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.

Explanation 2 : For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor-

(i)Where a resolution plan has not been approved or rejected by the Adjudicating Authority;

(ii)Where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or

(iii)Where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan.

(c)provides for the management of the affairs of the Corporate debtor after approval of the resolution plan;

(d)the implementation and supervision of the resolution plan;

(e)does not contravene any of the provisions of the law for the time being in force;

(f)confirms to such other requirements as may be specified by the Board.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 6(b) (Syllabus 2017).

Section 29 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 lays down the preparation of an information memorandum as one of the main functions of the resolution professional.

An information memorandum is envisaged to be prepared in order for the resolution applicants to provide solutions for resolving the insolvency of the corporate debtor. Hence contents need to be filled in with correct facts without any suppression. At the same time, the contents need to be impressive so that the Resolution Applicant is motivated to put in funds and efforts for revival of the Corporate Debtor.

Section 29(2) further indicates authorisation to the Resolution Applicant to access detailed information only after receipt of confidentiality undertaking from such applicant. Thus, the information memorandum and further details are confidential to the Resolution Professional, Resolution Applicant and of course Adjudicating Authority.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 4(c) (Syllabus 2017).

The Interim Resolution Professional needs to refer to Regulation 16 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 that deals with situations where either the corporate debtor has no financial debt or where all financial creditors are related parties of the corporate debtor.

Accordingly, in the present case, Committee of Creditors consists of maximum eighteen largest operational creditors in order of value, one each representing workers and employees. Each member of the committee shall have voting share in proportion to the debt due either as creditor or representative for whom they represent to the total debt as explained. The committee formed and its members shall have same right, power, duties and obligations as a committee comprising of financial creditors and its members as the case may be.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 5(a) (Syllabus 2017).

Section 29(2) of the of Insolvency and Bankruptcy Code, 2016 provides that the resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes:

(a)to comply with provisions of law for the time being in force relating to confidentiality and insider trading;

(b)to protect any intellectual property of the corporate debtor it may have access to; and

(c)not to share relevant information with third parties unless clauses (a) and (b) above are complied with.

On submission of the undertaking by YM Auto Ltd. can be shared with the Information Memorandum prepared by the Resolution Professional.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 5(b) (Syllabus 2017).

Attention of the Resolution Professional can be drawn to the provisions of Section 234 and 235 of the Insolvency and Bankruptcy Code, 2016 (IBC). Section 234 envisages the Central Government to notify to recover properties of the Corporate Debtor or any such Guarantor situated in a country, with which there is a reciprocal arrangement subject to specified conditions. Section 235 of the IBC enables the Resolution Professional to apply to Adjudicating Authority in such situations. On filing such application, the authority after being satisfied as to the evidences produced, may issue a letter of request to the Court or other authority of the other country for a suitable action. The current cross border insolvency framework in India is depend on entering in to Bilateral agreements with other countries. In the instant case, exists bilateral relation with the foreign nation and Resolution Professional may avail the provisions of Section 235.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 6(b) (Syllabus 2017).

Insolvency and Bankruptcy Board of India (IBBI) came out with a circular in January 2018 clarifying that an Insolvency Professional (IP) is required to perform certain tasks under the Code while acting as an Interim Resolution Professional, a Resolution Professional, a Liquidator or a Bankruptcy Trustee for various processes. They shall not outsource any of his duties and responsibilities under the Insolvency and Bankruptcy Code. They shall not require any certificate from another person certifying eligibility of resolution application. Further this was also stated that the insolvency professional shall exercise reasonable care and diligence and take all necessary steps to ensure that the corporate person undergoing any process under the Code complies with the applicable laws.

The Insolvency and Bankruptcy Code read with Insolvency Professional Regulations allow insolvency professional to appoint accountants, legal or other professionals, as may be necessary. IBBI noticed that certain IP are seeking from prospective resolution applicants to submit a certificate of their eligibility. This amounts to outsourcing responsibilities of insolvency professional to another person. The code read with regulation does not require such certification from a third person.

IBBI accordingly prohibited IP from outsourcing otherwise than in the Code and desist from asking for certificate of eligibility of Resolution applicants.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 6(a) (Old syllabus).

(i)Section 17 of the Insolvency and Bankruptcy Code 2016 (IBC) lists out the powers of an Interim Resolution Professional (IRP) to do all acts and execute documents in the name of corporate debtor (CD) for effective discharge of his responsibilities.

(ii)Section 17 (2) (e) of IBC specifies that the IRP is responsible for complying with the requirements under the law for the time being in force for the CD.

(iii)However Section 17 (1) (c) requires the officers and mangers of the CD shall report to IRP for accessing documents and records. Officers include Directors

that are suspended in terms of Section 17 (1) (b).

(iv)Although responsibility lies with IRP for compliance yet the suspended directors need to discharge their duties at the instructions of IRP.

(v)Thus in the given case the directors cannot claim their responsibility and they are duty bound to extend all cooperation to IRP for timely compliance.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 4(c) (Syllabus 2017).

Under Section 3(19) of Insolvency and Bankruptcy Code, 2016, Insolvency Professional (IP) means a person enrolled under Section 206 of the Code with an Insolvency Professional Agency as its member and registered with the IBBI under section 207 of the Code. The Code provides for IP as intermediaries who would play a key role in the efficient working of the insolvency and bankruptcy process.

The functions performed by Insolvency Professionals are:

i)Conducting Resolution Process;

ii)Conducting Meeting of Creditors;

iii)Management of operations of corporate debtor as going concern;

iv)Preparation of Information Memorandum;

v)Submission of resolution plan; and

vi)Conducting of Liquidation process under the order of Adjudicating Authority if the resolution plan is not accepted or approved, etc.

The contribution of IPs has become significant and Professional Bodies are imparting Training such that more IPs come to this profession. The contribution has just been initiated, but the role shall be greater and more prominent in future for IPs.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 6A(i) (Old syllabus).

As per sections 7(4), 7(5) and 7(7) of the Insolvency and Bankruptcy Code, 2016, following procedure is to be followed by Adjudicating Authority on receipt of an application by the financial creditor for initiation of Corporate Insolvency Resolution Process:

(i)The Adjudicating Authority shall, within fourteen days of the receipt of the application, ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor.

(ii)Where the Adjudicating Authority is satisfied that-

(a)a default has occurred and the application is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b)default has not occurred or the application is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:

(iii)Adjudicating Authority shall, before rejecting the application, give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(iv)The Adjudicating Authority shall communicate to the financial creditor and the corporate debtor, within seven days of admission or rejection of such application, as the case may be.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 4(b) (Syllabus 2017).

According to Regulation 3 (1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, a person shall be considered independent of the corporate person, if he -

(a)is eligible to be appointed as an independent director on the Board of the corporate person under section 149 of the Companies Act, 2013, where the corporate person is a company;

(b)is not a related party of the corporate person; or

(c)has not been an employee or proprietor or a partner –

(i)of a firm of auditors or secretarial auditors or cost auditors of the corporate person; or

(ii)of a legal or a consulting firm, that has or had any transaction with the corporate person contributing ten per cent or more of the gross turnover of such firm, in the last three years.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 6(c) (Syllabus 2017).

Section 25 of the Insolvency and Bankruptcy Code, 2016 sets out the duties of resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor and lays down the functions he may perform for the same. [Section 25(1)]

Section 25(2) of the Code provides that for the purposes of sub-section (1) of section 25, the resolution professional shall undertake the following actions, namely:

(a)take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;

(b)represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings,

(c)raise interim finances subject to the approval of the committee of creditors under section 28 of the Code,

(d)appoint accountants, legal or other professionals in the manner as specified by Board,

(e)maintain an updated list of claims,

(f)convene and attend all meetings of the committee of creditors,

(g)prepare the information memorandum in accordance with section 29 of the Code,

(h)invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans.

(i)present all resolution plans at the meetings of the committee of creditors,

(j)file application for avoidance of transactions in accordance with Chapter III, if any, and

(k)such other actions as may be specified by the Board.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 6A(i) (Syllabus 2017).

Section 12(1) of the Insolvency and Bankruptcy Code, 2016 lays down that subject to sub-section (2), the corporate insolvency resolution process (CIRP) shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.

Section 12(2) of the Code provides that the resolution professional shall file an application to the NCLT to extend the period of the CIRP beyond one hundred and eighty days, if he is instructed to do so by a resolution passed in a meeting of the committee of creditors (CoC) by a vote of sixty-six per cent of the voting shares.

Section 12(3) of the Code provides that if the NCLT is satisfied that the subject matter of the case is such that CIRP cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but such period cannot exceed ninety days.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 6(d) (Old syllabus).

As per section 208(1) of the Insolvency and Bankruptcy Code, 2016, where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated, it shall be the function of an insolvency professional to take such actions as may be necessary, in the following matters —

(a)a fresh start order process

(b)individual insolvency resolution process

(c)corporate insolvency resolution process

(d)individual bankruptcy process

(e)liquidation of a corporate debtor firm As per section 208(2) of the Code, every insolvency professional shall abide by the

following Code of Conduct —

(a)to take reasonable care and diligence while performing his duties;

(b)to comply with all requirements and terms and conditions specified in the byelaws of the insolvency professional agency of which he is a member;

(c)to allow the insolvency professional agency to inspect his records;

(d)to submit a copy of the records of every proceeding before the Adjudicating Authority to the Board as well as to the insolvency professional agency of which he is a member; and

(e)to perform his functions in such a manner and subject to such conditions as may be specified.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 6A(ii) (Old syllabus).

As per section 206 of the Insolvency and Bankruptcy Code, 2016 no one can render services of an Insolvency Professional (IP) without being enrolled as a member of an Insolvency Professional Agency (IPA) and registered with Insolvency and Bankruptcy Board of India (IBBI). Thus, only persons with requisite qualifications and registered as Insolvency Professional can take-up the roles of Resolution Professional or Liquidator including Voluntary Liquidation. IBBI (Insolvency Professionals) Regulations, 2016 require a person to complete a pre-registration educational course, as may be required by the Board, from an insolvency professional agency after his enrolment as a professional member. Section 207(2) of the Code empowers the IBBI to state eligibility criteria for the persons having exposure in finance, law, management, insolvency or such other field, as it deems fit.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 5(a) (Syllabus 2017).

Section 98 of the Insolvency and Bankruptcy Code 2016 provides for the grounds and the manner in which a resolution professional can be replaced with another resolution professional in an insolvency resolution process initiated under section 94 of the Code on an application by the debtor or under section 95 of the Code if applied for by a creditor. The debtor or creditor may apply to Adjudicating Authority for such replacement. Within seven days, the Adjudicating Authority shall make a reference to Insolvency and Bankruptcy Board of India (IBBI) for replacement. IBBI in turn within ten days shall recommend the name of Resolution Professional against whom no disciplinary proceedings are pending.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 5(d) (Syllabus 2017).