The Government has been formulating strategies with a view to repose the faith of the creditors in the judicial mechanism ascertaining that unscrupulous debtors do not evade off their liability on account of insolvency or bankruptcy thereby promising a speedy resolution.
The Government introduced the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC") with the aim to making availability of credit more transparent by maximizing the value of the assets in a time-bound manner. IBC restores the faith in the judicial mechanism and prevents the unscrupulous debtors from escaping the repayment of their debts by taking recourse to insolvency.
The Insolvency and Bankruptcy Board (hereinafter referred to as "IBBI") is the regulatory authority bestowed with the responsibility to ensure efficacious implementation of the fundamentals laid down under the IBC.
Insolvency Professionals Regulations
As per the provisions of the IBC, an insolvency resolution professional appointed to conduct the corporate insolvency resolution process.
The Government enforced the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (hereinafter referred to as "Insolvency Professionals Regulations") in order to regulate the insolvency proceedings carried out by insolvency professionals in an orderly and proper manner.
In order to reinforce the monitoring of the insolvency proceedings conducted by the insolvency professionals, the Government has brought forth a few changes in the Insolvency Professionals Regulations - the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2018 (hereinafter referred to as the "Amendment Regulations") on October 11, 2018. Some of the amended provisions are listed as below:
- Regulation 12(2) prescribes that an entity eligible to be classified as an insolvency professional may make an application for such recognition to the IBBI in Form C of the Second Schedule along with an application fee of INR 50,000.
- Regulation 13(2) provides the grounds on which the IBBI may issue recognition to the insolvency resolution professional which are as follows:
(a) Continuance of eligibility under the Insolvency Professionals Regulations;
(b) Updates when an individual ceases to be its director or partner, within 7 days, in Form F with fee of INR 2,000;
(c) Inform when an individual joins as its director or partner, within 7 days, in Form F with fee of INR 2,000;
(ca) Payment to the IBBI, a fee calculated at the rate of 0.25 % of the turnover from the services rendered by it in the preceding financial year, on or before the 30th of April every year, along with a statement in Form G
- Regulation 14 stating that without prejudice to any other action which the IBBI may take as deemed fit under the IBC or any regulations made thereunder, any delay in payment of fee by an insolvency professional or an insolvency professional entity, a simple interest at the rate of 12% p.a. on the amount of fee unpaid shall be paid to the IBBI after the last date of payment of fee under these regulations
The amendments to the Insolvency Professionals Regulations help in the better management of the insolvency resolution proceedings in an expeditious and effective manner.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.