The Insolvency and Bankruptcy Board of India (“Board”) has released guidelines “Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2023” on June 5, 2023, wherein the Board is required to recommend the name of an Insolvency Professional (“IP”) on receiving reference from the National Company Law Tribunal and Debt Recovery Tribunal (“Adjudicating Authority”) in respect of the Corporate Insolvency or Individual Insolvency, as the case may be, for appointment as an Insolvency Resolution Professional (“IRP”), Resolution Professional (“RP”), Liquidators or Bankruptcy Trustees (“BT”), as is required under the relevant provisions of the Insolvency and Bankruptcy Code, 2016 (“Code”).

Further, Rule 8(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 and Rule 8(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 enables the Board to share a panel of IPs, who may be appointed as resolution professionals or bankruptcy trustee, with the Adjudicating Authority (“Panel”).

These guidelines lay down the procedure for the preparation of this panel, as an urgency was felt to prepare this panel in advance and share it with the Adjudicating Authority, to avoid administrative delays. The Panel prepared by these guidelines will be effective from July 1, 2023 to December 31, 2023 (6 months).

The Board requires that only those IPs can apply who:

1. do not have pending disciplinary proceedings initiated either by the Board or the Insolvency Professional Agency (“IPA”);
2. have not been convicted in the last three years by a court of competent jurisdiction;
3. has submitted the requisite expression of interest along with consent to act as Interim Resolution Professional, Resolution Professional, Liquidator and Bankruptcy Trustee, on appointed by the Adjudicating Authority;
4. holds a valid Authorization for Assignment (AFA) which will not expire within 6 months of constitution of the Panel or inclusion in the Panel, as the case may be.

The Board shall invite expression of interest from IPs in FORM A by sending an e-mail to their email addresses registered with the Board. The IPs can submit their expression of interest by June 25, 2023. The Board will send the Panel to the Adjudicating Authority by June 30, 2023. The submission of expression of interest is an unconditional consent by the IP to act as an IRP, Liquidator, RP or BT of any process relating to a corporate or individual debtor, as the case may be. Eligible IPs will be chosen on the basis of volume of completed assignments in the order of experience. If two or more IPs score the same, then the IP registered earlier with the Board will be placed above.

Conditions for IPs:

1. The inclusion of the name of the IP in the panel will be deemed acceptance to act as IRPs, Liquidator, RP or BT, as the case may be, on being appointed by the Adjudicating Authority, as the case may be.
2. The IPs will not withdraw their consent or refuse to accept the appointment unless otherwise permitted by the Adjudicating Authority or the Board, in accordance with the law. Any refusal to act as IRP, Liquidator, RP or BT, as the case may be, on being appointed by the Adjudicating Authority, without sufficient justification, will be treated as deviation from consent and name will be removed from panel for six months.
3. It is desired that the IP will not surrender his registration to the Board or membership or Authorization for Assignment during the validity period of the panel.
4. The Adjudicating Authority may appoint the IP from the Panel to act as IRP, Liquidator, RP or BT, at their own discretion.
5. The Adjudicating Authority may refer to or direct the Board for the appointment of IP including the recommendation of IP, from or outside the Panel and in such cases, the Board may accordingly take suitable action for the appointment of IP, from or outside the panel.

These guidelines have repealed the Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2022 issued on December 12, 2022.

Please find a copy of the Circular, here.

This update has been contributed by Ankit Guha (Partner) and Shubhangi Gupta (Senior Associate).

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