28 Apr 2021 Ankit Chadha

Duties, Responsibilities and Challenges Tackled by Insolvency Professionals

Insolvency Professional | TRC Corporate Consulting

An Insolvency Professional or Insolvency Practitioner is someone who is registered under the Insolvency and Bankruptcy Board of India. These professionals to a registered Insolvency Professional Agency and involved in the dissolution of an insolvent person, company, partnership or LLP. Insolvency professionals (or IPs) have the authority to act on behalf of these insolvent individuals, companies etc. and play a significant role in liquidating the assets and other settlement procedures during a bankruptcy situation. The role of Insolvency Professionals and insolvency accountants has gone up significantly since the government strengthened the Insolvency and Bankruptcy Code.

Let's take a look at the functions of an insolvency professional in India.

The most valuable task of an Insolvency Professional is to evaluate the financial position of the company, partnership, LLPs, individual etc. and to guarantee a smooth process of its dissolution. These mavens, in certain probable cases, look for prospects to rescue businesses. Other than that, the main functions of an Insolvency Professional or Insolvency Practitioner include:

  • Examine the financial standing of a company, individual or partnership. They also need to ensure the seamless process of its dissolution.
  • Evaluate the financial statement of the corporation to evaluate its position.
  • Make necessary arrangements to facilitate the sale of all assets in order to liquidate the individual or company.
  • Conduct formal discussions with debtors/creditors and manage their settlement process.
  • Manage the settlement process of debtors and creditors by holding formal discussions with them.
  • Verify and settle creditors' claims in accordance with the available funds.
  • Be involved in the distribution of funds and set enough money aside to settle the liquidation cost.
  • Check on and solving other competing interest issues.
  • Prepare and submit the report to the National Company Law Tribunal, covering the following points.
  1. Plan and process of liquidation. This needs to be submitted within a span of 75 days from the commencement of the process
  2. Details of asset memorandum
  3. Interim report on the progress of the liquidation process
  4. Detailed report on the sale of assets
  5. Details of the discussions help with debtors and creditors, along with the conclusions

Concluding report before the dissolution of the company

Eligibility Criteria for Insolvency Professionals 

An individual is eligible to become an insolvency professional or insolvency practitioner if they meet the following eligibility criteria -.

  • Is an Indian resident
  • Is at least 18 years of age
  • Is solvent himself and has never been declared an insolvent
  • Has the required qualifications as specified by the IBBI
  • Has never been convicted by any competent law for an offence that is punishable with imprisonment for more than six months or one that involves moral turpitude, and at least five years have gone by from the date of the end of the sentence.

Code of Conduct of Insolvency Professionals 

Every insolvency professional in India shall abide by the following code of conduct:-

  1. To be fair and diligent at the time of duty
  2. To reasonably comply with the requirements and terms & conditions of their professional insolvency agency
  3. To be completely transparent with their agency about their records
  4. To turn in a copy of the record of the proceeding to the Adjudicating Authority, the Board, along with the professional insolvency agency of which they are a member of
  5. To abide by the conditions specified to them and perform their functions in the required manner.

Insolvency professionals or Insolvency accountants must stand  by the following values

  • Integrity and objectivity
  • Objectivity
  • Integrity
  • Independence
  • Impartiality
  • Competence
  • Accuracy and representation of correct facts
  • Punctuality
  • Confidentiality
  • Information management

Challenges Faced by Insolvency Professionals in India 

  1. Tight Deadline

An insolvency professional or insolvency practitioner is entrusted with a number of duties that need to be completed within a specified time period, and more often than not, these deadlines are incredibly tight.

  1. A large Number of Creditors 

Mostly insolvency professionals work with a large number of operational creditors. This makes verification of claims a time-consuming task.

  1. Interim Fees

Insolvency professionals often find it difficult to ascertain the appropriate interim fee for their services.

  1. Appointment of Professional for Assistance

Depending on the nature of the work, Insolvency professionals require assistance from time to time. This is when to look to hire assistants. But this can be a tedious task as there are several considerations attached to it. What are the appropriate fees for the same? How many assistants can one professional hire?

  1. Cooperating Staff 

Considering the demanding nature of this task, it is often hard to find cooperating staff to perform under insolvency professionals.

Our consulting solutions consist of services like insolvency, turnaround, operational and corporate financial restructuring. Our team of experts advances every kind of situation with clear understanding and reverence.

We at TRC Corporate Consulting recognize that all business situations are different. This is why we have committed teams that are dedicated to specialized areas ensuring that you get only the best advice. Our insolvency professionals are also trained to extend support to resolution professionals for the corporate debtor's corporate insolvency resolution process, consisting of handling the companies managerial and operational affairs.

We believe in a partner-led, integrated consulting service approach that consists of assessments, cost analysis, valuations, stakeholder management, tax advisory, and complete step by step plans for effective delivery of the IBC process. Our professionals provide guidance on the Insolvency and Bankruptcy Code (IBC) and enable organizations to preserve shareholder value in the formal insolvency code proceedings regulated under the Insolvency & Bankruptcy Code 2016.

get a call back

If you need to speak to us about a general query fill in the form below and we will call you back within the same working days

How can we help?