The Insolvency and Bankruptcy Board of India (IBBI) has implemented new guidelines aimed at streamlining the appointment of Insolvency Professionals (IPs) as Resolution Professionals (RPs), Liquidators, and Bankruptcy Trustees. This initiative seeks to expedite the corporate insolvency resolution process by ensuring a readily available pool of qualified professionals.
The Insolvency and Bankruptcy Board of India (IBBI) has announced a significant step towards enhancing efficiency in the corporate insolvency resolution process. The regulatory body has issued a new set of guidelines to streamline the appointment of Insolvency Professionals (IPs) as Resolution Professionals (RPs), Liquidators, and Bankruptcy Trustees.
These new guidelines, effective from July 1, 2024, introduce the concept of a pre-defined panel of IPs. The IBBI will prepare a panel of qualified professionals valid for six months, from July 1 to December 31, 2024. This panel will be shared with the National Company Law Tribunal (NCLT) and the Debt Recovery Tribunal (DRT) to expedite the appointment process for insolvency cases.
Previously, the process of selecting an IP for a particular case involved individual applications and potential delays. The new panel system aims to address this by ensuring a readily available pool of qualified professionals who have already expressed their interest and eligibility.
To be included in the panel, IPs must meet specific criteria. They cannot have any pending disciplinary proceedings against them and must not have been convicted by a court of competent jurisdiction in the preceding three years. Additionally, they need to hold a valid authorization for assignment and submit an expression of interest, along with their consent to act in various capacities like RP, Liquidator, or Bankruptcy Trustee.
The IBBI expects these new guidelines to lead to a faster and more efficient appointment process. By having a pre-selected panel, NCLT and DRT can readily choose qualified professionals for insolvency cases, potentially reducing delays and expediting the resolution process for companies undergoing financial distress.
The guidelines also emphasize the commitment of IPs to accepting appointments. Unless there is sufficient justification and permission from NCLT, DRT, or IBBI, an IP cannot decline an appointment after expressing their consent through the panel system. Failure to do so could result in removal from the panel for six months.
This initiative by IBBI reflects a commitment to improving the effectiveness of the corporate insolvency resolution framework in India. By streamlining the appointment process and ensuring the availability of qualified professionals, the IBBI hopes to expedite the resolution of cases and provide a more efficient mechanism for dealing with stressed assets.
