An IP (Insolvency Practitioner) is a person who is licensed as well as authorised to act in association with an insolvent individual, partnership or even a company. Most of the IPs are either accountants or insolvency specialists who have been working in firms of accountants.
The Insolvency and Bankruptcy Board of India (i.e. IBBI) was formulated on 1st Oct 2016 under the Insolvency and Bankruptcy Code, 2016 (Code). It regulates not just the professionals but also the processes. It has a regulatory supervision for Insolvency professionals, related agencies as well as related information utilities as well. It not only enacts but also enforces the rules of transactions example corporate liquidation, the corporate insolvency resolution, individual insolvency resolution and individual bankruptcy under the Code.
A petition for insolvency is deposited to the adjudicating authority (NCLT in case of corporate debtors) either by the financial or the operational creditors or the corporate debtor itself. The maximum time granted to either accept or reject the plea is fourteen days. If in case, the plea is approved, the tribunal ought to assign an Insolvency Resolution Professional (IRP) for drafting a resolution plan within 180 days which can further be extended by 90 days following which the Corporate Insolvency Resolution procedure is introduced by the court. For this particular time period, the Board Of Directors of the company stands pensile, and also the promoters don’t
have any say in the management of the company. The Insolvency Resolution Professional, if need be, can look for the support of the company’s management for their day-to-day operations. If in case, the CIRP fails to recover the company the liquidation process would be initiated.
As most of the banks, as well as financial institutions, aim to settle the bad loans incidents that are a strain on its capacity and pose a kind of imperial to their ledger performance. Today, there is extensive demand for IPR’s (i.e. Insolvency Resolution Professionals). The most suitable lot for applying for the post of an insolvency professional are cost accountants, chartered accountants as well as company secretaries. These insolvency experts are actually required not only to oversee the process but also to function the entire Insolvency resolution operation for corporate entities.
As per the Insolvency and Bankruptcy Code, 2016, section 206 highlights that only a person who is certified as an Insolvency Professional by Insolvency and Bankruptcy Board of India (i.e. IBBI) can administer the insolvency professional services. He would also take up the complete corporate insolvency resolution process inclusive of the fast track process and shall be reimbursed an amount as part of the insolvency resolution process cost.
Largely, the chartered accountants (i.e. CAs) play a pivotal role in the domain of insolvency resolution process. Their obligations include:
There are rather 3 Insolvency Professional Agencies namely ICSI, ICAI and ICMAI that administer the Insolvency Professionals as it controls the
capacity for the same. As per latest information, the ICAI has registered more than seven hundred Chartered Accountants as insolvent professionals during the financial year 2017-18 and is estimated to have enrolled more than 1000 more inquiries in order to get members enrolled for the same.
An Insolvency Professional can play any of the given roles –
‘Insolvency is actually the state of not being able to pay the amount owed, either by a person or a company, on time. All those in a state of insolvency are known as insolvents. A Cash-flow insolvency is a situation where an individual or a company has enough assets in order to pay for what is owed but does not have the appropriate form of payment.’
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