19 Feb 2022 Ankit Chadha

What is the Role and Duties of an Insolvency Professional under the IBC?

Insolvency Professionals | TRC Corporate Consulting

To understand the role and duties of an insolvency professional, you need to know the meaning of an Insolvency Professional. To put it simply, Insolvency Professionals are professionals registered under any Insolvency Agency, and they are a part of the termination process of an insolvent entity, firms, LLPs, or partnerships. These professionals are permitted to act on behalf of such insolvent entities, companies.

When a company faces bankruptcy, the insolvency professionals play a key role in liquidating the entity assets and carrying out other settlement processes. This procedure has gained momentum with the government introducing strict norms through India's Insolvency and Bankruptcy Code.

What is an Insolvency Professional Agency? 

An insolvency professional agency is a consulting firm or insolvency organization registered under IBBI u/s 201 of Insolvency Code, 2016.

The main function of these agencies is to control the activities of insolvency professionals. Also, they make sure that they are emerging in the industry. These professional members must comply with the terms and conditions as restricted in the byelaws of the insolvency agency code. IBBI practices control over insolvency resolution professional agencies and its professionals concerning the complaints registered under section 217 of the Insolvency Code.

What Is the Role of an Insolvency Professional Agency? 

Apart from managing and registering the insolvency and bankruptcy professionals, the insolvency resolution professional agency also does the following as specified in section 204 of the Insolvency Code (with effect from 15-11-2016):

  • Insolvency professional agency has the main function of providing membership to insolvency professionals.
  • These agencies set up the standard of professional conduct and ethics for the members registered under them.
  • They safeguard the rights and privileges of the members and protect their interests
  • They also make inquiries about the member's complaints and take steps to settle them.
  • The agency constantly supervises members' performance and suspend/cancel affiliation where and when necessary.

 

What Are the Eligibility Criteria for Insolvency Professional? 

An entity is qualified to become an Insolvency Professional provided, he/she:

  • Is a resident of India and is of 18 years of age (Majority)?
  • Is of fit and sound mind.
  • Is solvent and has not been proclaimed as insolvent at any point in time.
  • Acquire the necessary qualification and knowledge as mentioned by the IBBI.
  • Has not been sentenced by any competent court/law for a crime punishable with imprisonment for a term beyond six months or for an offence involving moral turpitude, and five years have not gone from the expiry date of the sentence.

Qualification and Experience

As a first step, any applicant must register with Insolvency Professional agency. Here are the qualifications and experience for the applicants to be registered as Insolvency Professionals:

  • They must either qualify the National Insolvency Examination (or)
  • Pass the Limited Insolvency Examination, in which case the candidate should have 15 years of experience in management after obtaining a bachelor’s degree from a university established or recognized by law (or)
  • Has qualified the Limited Insolvency Examination and has 10 years of expertise as:
  • A chartered accountant and is a representative of the Institute of Chartered Accountants of India (or)
  • A company secretary and is a representative of the Institute of Company Secretaries of India (or)
  • A cost accountant and is a fellow of the Institute of Cost Accountants of India (or)
  • Is an advocate registered under Bar Council.
  • Once the listed qualifications are met, the applicants can start practising as Insolvency professionals.

Functions Of an Insolvency and Bankruptcy Professional 

One of the essential roles of the Insolvency Professionals is to measure the financial position of the business, partnership, LLPs, individuals., and to guarantee an effortless procedure of its termination. In certain cases, these professionals look for opportunities to even rescue businesses. Moreover, the main functions of an Insolvency Professional are:

  • Evaluate the financial statement of the firm and recognize the position.
  • Set up all the needed arrangements to sell the assets of the liquidating entity or company.
  • Know the receivables position of the company/Individual and look after the collection procedure.
  • Carry out formal discussions with debtors/creditors and oversee their settlement procedure.
  • Check and agree on the creditors' allegations as per the existing funds. This is one of the primary duties of Insolvency professionals.
  • Engage in the fund allocation procedure after setting aside the money required to pay the liquidation cost.
  • Settle all dues with the other competing interest, if any.

Insolvency professionals are needed to organize and submit a report to the National Company Law Tribunal with the following:

  • The liquidation strategy and process has to be presented within 75 days of the beginning of the process by the Insolvency professionals.
  • A comprehensive report on the asset memo.
  • Provisional report on how the liquidation process is evolving from time to time.
  • Specifics about the sale of all the assets.
  • Discussion with the Debtors and Creditors and the decisions arrived.
  • Final report before the dissolution of the company, partnership, and others.

How TRC Helps in The Insolvency Resolution Process? 

TRC Corporate Consulting seeks to offer customized attention to its client and set up tailored services as per their requirement. So, be it the process of liquidation, Insolvency resolution, or Accounting and Financial Advisory services, our main concern is to deliver only the best to you. Our consultants also deliver extra services such as 29 A Verification, Collation of claims, FAR management, and much more.

At TRC, our team of Insolvency professionals adhere to an analysed and assessed approach with impartial understanding before taking any steps and keeps you in the loop by informing you on everything about the procedures. To know more about our Insolvency services better, contact us now!

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