The role of insolvency professionals with special reference to the Insolvency and Bankruptcy Code 2016

Abstract

The Indian Banking Industry has always grappled with the issue of Insolvency. Ensuring an optimum cash flow is crucial for the banking sector to function productively satisfying the various stakeholders. This is one of the main reasons as to why we need to maintain financial soundness in the market economy and contain the weed of Insolvency. Though various codified laws like SARFARESI, RDDB etc. have governed the recovery of debts, the system of dealing with insolvency underwent a drastic change with the enactment of the Insolvency and Bankruptcy (I&B) Code enacted on the 30th day of November 2016. The I&B Code is an Act consolidating and amending the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms & individuals in a time bound manner and for ensuring smoother settlement of Insolvency litigations by various adjudication authorities like Debt Recovery Tribunals and creation of data base of creditors. The Code provides for certain authorities through which the Insolvency and Bankruptcy process are carried out such as:

• Insolvency and Bankruptcy Board of India (IBBI).
• Insolvency Professional Agencies.
• Insolvency Professionals.
• Information Utilities.

Our paper will focus on the Role of Insolvency Professionals. Insolvency Professionals are registered members of Insolvency Professional Agencies (IPAs) under the IBBI governing the Insolvency Resolution process of corporate , individuals and partnership firms. Part IV, Chapter IV of the I&B Code deals with Insolvency Professionals and Section 206 under Chapter IV of the Code mandates for compulsory registration of Insolvency Professionals. They are persons possessing qualifications and expertise in the field of finance, law, management and other specializations deemed for by the IBBI. The role of an Insolvency Profession arises wherever there is an Insolvency Resolution, fresh start process, liquidation or bankruptcy process. An Insolvency Professional aids both corporate and individuals for insolvency resolution process under various provisions of the I&B Code.

The I&B Code, 2016 operates as a consolidated law governing insolvency and thereby avoiding the conflict of various other laws dealing with insolvency. The I&B Code has through its various provisions have taken the lead in regulating various insolvency and bankruptcy proceedings by providing for the establishment of various authorities like the Insolvency Professionals, Information Utilities etc. Since these mechanisms are required for the effective implementation of the Code, the importance of the authorities regulating insolvency proceedings requires detailed study. Insolvency Professionals are one such specialized authority who deals with creditors and perform their roles like insolvency resolution processes, fresh start process and liquidation proceedings through Insolvency Professional Agencies which in turn is working under the agencies of the IBBI. Hence, their role as an authority regulating insolvency, as an initiator and approver insolvency proceedings should be studied.

Keywords: IBC, IBBI, Insolvency Professional, Insolvency proceedings

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