New Restriction on Insolvency Resolution Professionals
Recently, new restriction have been placed on Insolvency resolution professionals.
These changed norms are part of Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021.
- Now any association of insolvency professionals with corporate debtor or other stakeholder is not permitted.
- Insolvency and Bankruptcy Board of India: IBBI has authorized Interim Resolution Professionals and Resolution Professionals (RP) to appoint another professional to assist in the discharge of the duties of the RP.
- This will be allowed only after compliance with certain conditions, such as clear restrictions on the appointment of auditors of the RP’s relatives and corporate debtors for the last 5 years, etc.
- To ensure transparency and fair trade practices in the appointment of RPs.
- To address potential conflicts of interest in the working of the RPs.
Insolvency and Bankruptcy Code: IBC) 2016
- The Code provides for a time bound process (within 330 days) for resolution of insolvency matters of corporate debtors.
- IBBI was established under the IBC in the year 2016 for the implementation of the Code.
- This Code consolidates and amends the laws relating to reorganization and insolvency resolution of corporate individuals, partnership firms and individual entities to balance the interests of all stakeholders.
Source – PIB