Gone are the days, the creditors were at the mercy of the Court to get back their money from the hands of a debt-ridden person, which owes a special thanks to the will of the Government to introduce the mighty law , Insolvency and Bankruptcy Code, 2016(Code), governing the principles of creditworthiness and conscience of Indian society. An Insolvency professional must have to be skilled, knowledgeable, prudent, lawful and above all ethical in his dealings. He should be a man of integrity and maintain professionalism while dealing with stakeholders. This article discusses the roles, responsibilities, duties and qualities which are required to be possessed by an Insolvency Professional while playing an active role under the Code.
IBC- A Complete code
Within two years of its introduction, the Code had paved deep in-roads into the credit recovery system of the Country wherein which it is established that the promoters who are in default to repay their debts have no right continue in the ownership and management of the defaulting entity and they have to step down from their adobes of comfort and give way to new bunch of promoters who can inject fresh blood of commerce to it and revive the economic ecosystem of the said entity. The Code is a complete piece of legislature which stipulates for the resolution of debt of a corporate person, individuals and partnerships and thereby handhold it to its timeworn magnificence. Unlike its predecessors, the Code objectives for insolvency resolution of corporate persons, individuals and partnership firms in a time bounded manner for maximisation of the value of the assets of such persons, to promoter entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the priority of payment of government dues.
Insolvency Professional- A symbol of uprightness and judiciousness.
The corporate insolvency resolution process envisages for the continual and uninterrupted operations of the corporate person from the date of the commencement of the process to the date of the approval of resolution plan and thereby ensures that the corporate person continue to function and contribute to the economic well-being of the society where it belongs to. There comes the role of an Insolvency Professional who plays a decisive role in the said process. The Insolvency Professional, shall be initially designated as Interim Resolution Professional(IRP) by National Company Law Tribunal (NCLT) at the time of admission of the application, is an officer of the Court, who is a qualified professional under the licentiate of Insolvency and Bankruptcy Board of India(IBBI), shall step into the shoes of the Board of Directors/Partners of the corporate person to manage the operations of the corporate person along with other multiple responsibilities cast upon him. Insolvency Professional is the epicenter of which the entire resolution process is revolving upon. The insolvency professional have to protect and preserve the value of property of the corporate debtor and maintenance of its operations as a going concern. He is also responsible to collect all information relating to the assets, finances and operations of the Company for determining the financial position of the Company and take control and custody of assets of the Company as per the Code. He is responsible to receive, collate & verify claims submitted by creditors and constitute Committee of Creditors (“CoC”) for the Corporate Debtor & prepare list of creditors. He needs expertise to prepare the information memorandum and invite prospective lenders, investors, and any other persons, through publication of Expressions of Interest / Notice of Invitation or otherwise, to submit resolution plans. Insolvency professional is required to act as as Interim Resolution Professional, a Resolution Professional or Liquidator or a Bankruptcy Trustee at various stages of the process which cast upon high level of responsibilities to his office.
Prudent in his actions
It is the duty of the insolvency professional to ensure the compliance of the provisions of applicable laws Acts, Regulations, Circulars, Guidelines, Orders, Directions etc by the corporate person which is undergoing Insolvency Resolution Process, fast track insolvency resolution process, liquidation process or voluntary liquidation process under the Code. It is the duty of the Resolution Professional to exercise reasonable care and diligence and take all necessary steps to ensure that the corporate person undergoing any process complies with applicable laws. He shall be responsible for the non-compliance of the provisions of the applicable laws if it is on account of his account of his conduct. So an Insolvency professional have to be well versed will all corporate, business and financial aspects of the corporate person and have to act in prudent and professional manner throughout the process.
Transparent in his dealings and relationships
The Insolvency and Bankruptcy Code (Code) cast upon various specific duties and responsibilities on Insolvency Professional while undertaking the responsibilities for various processes. Though the Code is demanding high level of expertise and involvement from Insolvency Professional it does not allows him to outsource any of his duties and responsibilities to any other professional or third person. The Code emphasises the requirement of disclosures by the Insolvency Professional appointed as Interim Resolution Professional or Resolution Professional at various stages to various bodies and authorities. He must have to be independent from Corporate Debtor, other professionals who are being engaged such as Registered Valuers, Accountants, legal Professionals other professionals etc engaged by him, Financial Creditors, Interim Finance Providers and prospective resolution applicant.
Conscience keeper and ethical personality.
An insolvency professional has to be very professional in his dealings and is duty bound to maintain confidentiality of the information relating to the insolvency resolution process, liquidation or bankruptcy process, as the case may be. He may disclose any information with the consent of relevant parties or as required by law. This shows the requirement of integrity to be maintained by an Insolvency professional throughout the process.
The role of an insolvency professional is very crucial in the insolvency resolution process. The success of the said process is directly linked with the experience, knowledge, expertise, quality, integrity, professionalism and ethical standards of the Insolvency professional throughout its journey. If an insolvency professional is not maintaining the said standards that will not only damage the reputation of the profession but negatively impact the very purpose of the Insolvency and Bankruptcy Code also.