Insolvency Professional: Role, Appointment, Duties and IBBI Regulation

The Insolvency Professional (IP) is the key functionary in the Insolvency and Bankruptcy Code 2016. On commencement of CIRP, the IP replaces the board of directors and takes over management of the corporate debtor. This guide explains the IP's role, legal duties, and regulatory framework.

Who is an Insolvency Professional?

An individual registered with the Insolvency and Bankruptcy Board of India (IBBI) as an Insolvency Professional after meeting eligibility requirements:

• At least 10 years of professional experience (CA/CS/CMA with 10 years, or advocate with 10 years)
• Limited Insolvency Examination (IBBI) passed
• Registered with an Insolvency Professional Agency (IPA)

IRP vs Resolution Professional

• IRP (Interim Resolution Professional): Appointed by NCLT immediately on CIRP admission. Manages the corporate debtor for the first 30 days.
• RP (Resolution Professional): Appointed/confirmed by CoC within 30 days of IRP's appointment. Manages the entire CIRP process.

Key Duties of the RP

1. Take over management and assets of the corporate debtor immediately on appointment
2. Make public announcement and invite claims from all creditors
3. Constitute the Committee of Creditors (CoC)
4. Prepare Information Memorandum (business profile of debtor)
5. Issue Request for Resolution Plans (RFRP) to eligible applicants
6. Conduct CoC meetings, record minutes, facilitate voting
7. Evaluate resolution plans; submit approved plan to NCLT
8. Manage day-to-day operations to preserve going concern value

Fiduciary Duties

The RP owes fiduciary duties to all creditors (not just CoC members) and the CIRP ecosystem. Key duties:

• Act in the best interest of all stakeholders
• Maintain independence from the corporate debtor and its promoters
• Disclose all conflicts of interest
• Keep CIRP costs reasonable (must be approved by CoC)

Liability of IP

• IPs are personally liable for acts done in breach of their duties
• IBBI can take disciplinary action: suspension/cancellation of registration
• Criminal liability for fraudulent conduct during CIRP

IP Fees

IP fees are part of CIRP costs — paid with highest priority from assets. Fee structure: hourly rates, fixed fee, or percentage of claims resolved. CoC approves IP fees; disputes go to NCLT.