The Resolution Professional: Navigating Corporate Insolvency
The Insolvency and Bankruptcy Code (IBC) of India establishes a structured framework for resolving corporate insolvency. At the heart of this process is the Resolution Professional (RP), a crucial figure appointed to manage the affairs of the corporate debtor and guide it through the Corporate Insolvency Resolution Process (CIRP).
Appointment and Initial Duties of the Resolution Professional
Key Responsibilities During CIRP
The Resolution Professional's role extends far beyond mere administration. They are the central orchestrator of the entire resolution process, ensuring compliance with the IBC and facilitating a successful outcome.
To manage the corporate debtor's affairs, preserve its value, and facilitate a resolution plan.
The RP's responsibilities can be broadly categorized as follows:
Information Gathering and Management
The RP must collect all relevant information about the corporate debtor's financial standing, assets, liabilities, and operations. This includes obtaining financial information from creditors, verifying claims, and preparing a list of creditors. The RP also has the power to call for information from any person who has been associated with the corporate debtor.
Committee of Creditors (CoC) Facilitation
A core function of the RP is to facilitate the functioning of the Committee of Creditors (CoC). This involves convening meetings, providing necessary information and reports to the CoC, and ensuring that decisions are made in accordance with the IBC. The CoC, comprising financial creditors, plays a pivotal role in approving or rejecting resolution plans.
Resolution Plan Development and Approval
The RP is responsible for inviting resolution plans from prospective resolution applicants. They evaluate these plans based on the criteria laid down by the CoC and present them to the CoC for consideration and approval. If a resolution plan is approved by the CoC and subsequently by the Adjudicating Authority, the RP oversees its implementation.
Operational Management
While the RP takes control of the corporate debtor's assets, they may also be required to manage the ongoing operations of the business to ensure its viability and preserve its value. This can involve making decisions regarding employees, suppliers, and customers, always with the objective of maximizing the value of the assets.
Reporting and Compliance
The RP must regularly report to the Adjudicating Authority and the Insolvency and Bankruptcy Board of India (IBBI) on the progress of the CIRP. They are also responsible for ensuring compliance with all provisions of the IBC and its regulations.
The Resolution Professional acts as a fiduciary, bound by duties of good faith and diligence to all stakeholders, especially the creditors.
Duties and Liabilities
The IBC imposes significant duties on the Resolution Professional. Failure to discharge these duties can lead to penalties and liabilities.
| Duty | Description | Consequence of Breach |
|---|---|---|
| Act in good faith | Uphold the interests of all stakeholders impartially. | Penalties, removal from panel, civil liability. |
| Preserve value | Manage the corporate debtor to maximize asset value. | Civil liability for losses. |
| Comply with IBC | Adhere strictly to the provisions of the Code and regulations. | Penalties, disciplinary action. |
| Report accurately | Provide truthful and timely information to NCLT and IBBI. | Penalties, criminal proceedings. |
The Resolution Professional's Independence and Integrity
The effectiveness of the CIRP hinges on the independence and integrity of the Resolution Professional. They must operate without bias, ensuring a fair and transparent process for all parties involved. The IBBI plays a crucial role in regulating RPs, maintaining a panel of insolvency professionals, and ensuring adherence to ethical standards.
The Resolution Professional's journey through CIRP can be visualized as a structured process. It begins with the appointment and assumption of control, followed by meticulous information gathering and claim verification. The RP then acts as a bridge between the corporate debtor and the Committee of Creditors, facilitating meetings and discussions. The core of their role involves inviting, evaluating, and presenting resolution plans. Throughout this, operational management and strict adherence to reporting and compliance requirements are paramount. The ultimate goal is the successful implementation of an approved resolution plan or, failing that, the liquidation of the corporate debtor.
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Learning Resources
The primary legal document governing insolvency and bankruptcy in India. Essential for understanding the framework and the roles of various stakeholders.
The official website of the IBBI, providing regulations, circulars, and other important information related to insolvency professionals and processes.
A detailed article explaining the multifaceted role and responsibilities of a Resolution Professional under the IBC.
An introductory video that provides an overview of the IBC and the key processes involved, including the role of the RP.
This resource breaks down the specific duties and responsibilities that a Resolution Professional must undertake during the CIRP.
The official website of the NCLT, the Adjudicating Authority for insolvency matters. Provides case information and procedural guidelines.
A comprehensive guide to the IBC, with sections dedicated to the roles of key players like the Resolution Professional.
An article focusing on the specific powers and duties conferred upon a Resolution Professional by the IBC.
Information from the IBBI detailing the eligibility criteria, registration process, and regulatory framework for Insolvency Professionals.
Keeps learners updated on recent amendments to the IBC, which can impact the role and responsibilities of the Resolution Professional.