Insolvency Professionals explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The Code of Conduct for Insolvency Professionals sits in the First Schedule to the IBBI (Insolvency Professionals) Regulations, 2016, under Regulation 7(2)(h). It is organised under nine heads covering integrity and objectivity, independence and impartiality, professional competence, timeliness, information management, confidentiality, occupation and employability restrictions, remuneration and costs, and gifts and hospitality.
The nine heads
| # | Head | What it governs |
|---|---|---|
| 1 | Integrity and objectivity | Honesty, freedom from bias, conflict disclosure, and the bar on acquiring the debtor's assets |
| 2 | Independence and impartiality | Freedom from external influence in conducting the process |
| 3 | Professional competence | Capability to discharge the assignment |
| 4 | Timeliness | Meeting the Code's timelines |
| 5 | Information management | Custody, accuracy and availability of process information |
| 6 | Confidentiality | Protection of information obtained in the assignment |
| 7 | Occupation, employability and restrictions | What else an insolvency professional may do |
| 8 | Remuneration and costs | Fees and process costs |
| 9 | Gifts and hospitality | What may be accepted, and from whom |
Why the standard is set where it is
The Delhi High Court in Pooja Menghani v. IBBI, W.P.(C) 8696/2022 explained why insolvency professionals are held to an exacting standard:
"An IP performs very important functions in the insolvency resolution process of a company. An IP virtually takes over the company during the period it goes through the insolvency resolution process. An IP in fact becomes the heart and brain of the company under the insolvency resolution process and a person having slightest of disqualification cannot be permitted to be appointed as an IP otherwise the entire purpose of the IBC will get vitiated."
The phrase "slightest of disqualification" is the operative one. The court did not adopt a materiality test. Insolvency professionals occupy a position where the ordinary tolerance for minor issues does not apply, because the person is exercising the powers of the board over a company whose stakeholders did not choose them.
The Code of Conduct is a condition of registration
Regulation 7(2)(h) places the Code of Conduct among the conditions subject to which registration as an insolvency professional is granted. It is not aspirational guidance — a breach goes to the professional's standing, not merely to the conduct of a particular assignment.
How the 2026 amendment raises the stakes
The IBC (Amendment) Act, 2026 adds statutory accountability on top of the Code of Conduct:
- Section 47 — where an RP, IRP or liquidator fails to identify and file applications for transactions that could have been discovered with proper professional effort, any stakeholder may approach the Adjudicating Authority, which may recommend disciplinary action to IBBI.
- Section 18 — the IRP or RP must verify and determine the value of claims, described as a quasi-adjudicatory function.
- Separate applications are required for avoidance transactions under sections 43 to 51 and for fraudulent and wrongful trading under sections 66 and 67.
The practical effect is that professional competence and timeliness under the Code of Conduct now have a statutory counterpart with a defined consequence.
Reading the Code of Conduct as a working document
Insolvency professionals tend to encounter the nine heads as a compliance list. It is more useful to read them as answers to four questions that arise in every assignment:
- Can I take this appointment? — integrity and objectivity; independence and impartiality; occupation, employability and restrictions.
- Can I do this work properly? — professional competence; timeliness.
- What do I do with what I learn? — information management; confidentiality.
- What may I receive? — remuneration and costs; gifts and hospitality.
Compliance checklist
- Treat the Code of Conduct as a condition of registration, not guidance.
- Apply the "slightest of disqualification" standard when testing eligibility for an appointment.
- Run the four questions above at acceptance, not after.
- Document compliance under each head where a question arises.
- Read the Code of Conduct alongside section 47 exposure.
Common mistakes
- Applying a materiality filter to a disqualification.
- Treating the Code of Conduct as advisory.
- Considering conflicts only at appointment rather than throughout.