14 Oct 2021 Ankit Chadha

Insolvency Professionals: Responsibilities, Code of Conduct and Duties

Insolvency Professionals | TRC Corporate Consulting

Insolvency professionals have developed new vocations that provide essential advice on bankruptcy. Bankruptcy is a result of financial mismanagement by businesses. From a possession recovery process to a customer run routine, insolvency professionals play a huge role in helping out businesses recover or wind up by increasing the pace to cope up with financial mismanagement. Henceforth, as part of the resolution process, insolvency professionals take management of the problematic businesses and helps them liquidate strategically and in an organized way.

As liquidating a company is a crucial task and needs to be performed tactfully, it is important to seek the help of an experienced insolvency professional or an insolvency practitioner. With reputable consulting agencies like TRC Corporate Consulting, you can leverage the services of the best insolvency professional for your firm.

Duties of Insolvency Professionals 

The fundamental responsibility of an insolvency expert is to examine a company's financial situation. Let’s look at some other duties of the insolvency professionals:

  • Examine the company's financial status to gain a better understanding of it;
  • Make plans while organising official meetings with clients and lenders and working on a insolvency resolution process;
  • To verify and confirm the creditors' claims concerning the available funds.
  • Ascertain that suitable arrangements are in place for auctioning assets while liquidating an individual or an organisation;
  • Pay the liquidation costs and utilise the remaining monies to distribute the funds.

Responsibilities of Insolvency Professionals 

  • Attempt to maintain and preserve the brand value of the firm and its on-going business operations;
  • Gather information about assets, money, and operations;
  • The formation of the Committee of Creditors (COC) and providing financial details to them;
  • Execute the complete corporate insolvency resolution process;
  • Examine the corporate insolvency resolution process and submit a compliant plan for approval to the COC.

What is an Insolvency Professional Agency? 

  • An independent body which registers the eligible insolvency professionals as its members.
  • Any person registered as an insolvency professional agency with the IBBI under Section 201 of the Insolvency Code, 2016 – Section 3(20) of the Insolvency Code, 2016.

Roles and Responsibilities of Insolvency Professional Agencies 

An insolvency professional agency lays several roles and responsibilities which are to be adhered by insolvency resolution professionals or insolvency practitioners. Here’s a list of their functions:

  • Insolvency professional agency evaluates its members' (insolvency resolution professional or insolvency practitioner) performance and has the right to revoke their licences.
  • Taking note of its members'  (insolvency resolution professional or insolvency practitioner) problems and offering suitable guidance with conduct rules for them and at the same time, resolves their grievances
  • Their primary purpose is to admit insolvency specialists’ like -  insolvency resolution professional or insolvency practitioner to membership.
  • To protect its members' (insolvency resolution professional or insolvency practitioner) interests, rights, privilege that are being granted to them.
  • Insolvency professional agency can also suspend or cancel a member's membership.
  • Insolvency professional agency also collates information regarding the organization's functions, membership list, and members’ performance.

 

Is There a Code of Conduct For Insolvency Professionals? 

Yes, insolvency professionals, insolvency professional agencies, insolvency resolution professionals, and insolvency practitioners - everyone has a code of conduct to be followed. Non-adherence to which can impose penalties, punishment and even disciplinary actions by the IBBI (Insolvency and Bankruptcy Board of India.)

Below is the Code of Conduct to be followed by insolvency professionals:

  1. Integrity and Objectivity 

  • An insolvency practitioner must preserve integrity by being honest, straightforward, and upfront.
  • An insolvency practitioner must not misrepresent facts and must avoid taking any action that might bring the profession into defamation or disrepute.
  • An insolvency professional must act objectively in his professional interactions by ensuring that his decisions are made free of any bias, conflict of interest, coercion, or undue influence from any party, whether or not they are directly involved in the insolvency resolution process.
  • An insolvency professional serving as an interim (insolvency) resolution professional should not directly or indirectly acquire any of the debtor's assets
  • When an insolvency practitioner encounters a conflict of interest while working on a project, he should notify the appropriate stakeholders.
  1. Independence and Impartiality 

  • When dealing with professional relationships, an insolvency professional must be autonomous, and the insolvency resolution process should be conducted independently irrespective of any internal/ external influences.
  • If an insolvency professional or insolvency practitioner has a relationship with the corporate debtor and his related parties, the former should not accept the assignment of insolvency resolution process.
  • If the insolvency professional has any relationship with a stakeholder who is entitled to a distribution of assets, that relationship should be disclosed by making a declaration to the Committee of Creditors (COC), the resolution applicant, and the person proposing appointment.
  • An insolvency practitioner shall not create illegal gains or obtain an unfair advantage for himself or his associated parties. He/ she should not use any unethical ways to attain his malevolent goals, nor should he provide any other individual with an unfair advantage for illegal gain.
  1. Professional Competence 

  • To provide good professional service, an insolvency practitioner must maintain and upgrade his professional knowledge and abilities.
  • He/she should represent correct facts
  • To the IBBI, or any stakeholder, insolvency professional should never withhold material facts or make a deceptive statement.
  • The insolvency professional should also notify the affected individual as soon as feasible if he is aware of any misinterpretation or erroneous evaluation of facts.
  1. Timeliness 

  • An insolvency professional must adhere to the time limits outlined in the Insolvency and Bankruptcy Code for insolvency resolution process, liquidation, or bankruptcy, as the case may be, and must carefully plan his actions and communicate with all stakeholders involved.
  • While performing his or her powers and duties under the Insolvency and Bankruptcy Code, an insolvency professional shall not act in bad faith or be negligent.
  1. Information Management 

  • An insolvency practitioner must make every effort to ensure that all communication to stakeholders is done in advance and easy-to-understand manner.
  • An insolvency professional must keep written contemporaneous records of all decisions made, as well as the rationale for the decision and the information and evidence to support it. Unless the Insolvency and Bankruptcy Code adjudicating authority necessitates it, an insolvency professional must not communicate privately with any of the stakeholders.
  • An insolvency professional shall furnish the IBBI or the insolvency professional agency with which he is enrolled with any information and records that the Board or the insolvency professional agency may request.
  • For any periodic study, research, or audit done by the Board, insolvency professional must be available and offer information.
  1. Confidentiality 

  • Information relating to the insolvency resolution process, bankruptcy, or insolvency procedure must be kept confidential by insolvency professional.  He/ she may only release in the public if ordered by the higher authorities or law.
  • Occupation, employability and restrictions 
  • If an insolvency specialist isn't sure he'll be able to devote enough time to each of his assignments, he shouldn't take on too many.
  • An insolvency professional may not engage in any activity that, in the Board's opinion, is inconsistent with the profession's reputation.
  • An insolvency practitioner should not provide his or her services to any of his or her relatives or linked parties for or in connection with any project that they are working on.
  • When an insolvency professional has completed a successful corporate insolvency resolution process, unless it is required by the IBC.
  1. Remuneration and Costs 

  • An IP must disclose to all relevant stakeholders the costs associated with the insolvency process, liquidation, and bankruptcy, and must make every effort to ensure that these charges are reasonable.
  • An insolvency professional must provide services for a fee that is charged in a transparent manner and not in violation of the applicable legislation.

Why Leverage Services of TRC Corporate Consulting’s Insolvency Professionals? 

TRC Corporate Consulting strives to give each customer individual attention and tailor services to their specific needs. So, whether it's the liquidation process, insolvency resolution process, or accounting and financial advisory services, TRC Corporate Consulting’s services prove to be highly supportive. Our additional services provided by our experts include 29A Verification, Claim Collection, FAR Management, and much more.

TRC Corporate Consulting’s qualified team of insolvency professionals use an analysis and assessment method with unbiased understanding before taking any further steps in the insolvency resolution process and keep you informed and updated on the proceedings.

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