15 Feb 2022 Ankit Chadha

Who Is An Insolvency Professional and What Role Does He Play?

Insolvency Professionals | TRC Corporate Consulting

To understand who are insolvency professionals, first, you need to know what is insolvency. So, when a company, an individual or a partnership decides to liquidate itself, it is considered to be insolvent. In simple words, Insolvency is the process of selling the assets in return for cash during the closing of the organization. The insolvency professionals are needed during this process to identify the assets, record all the transactions officially, and initiate the allocation of the money.

There are not one but thousands of legal procedures that need to be executed while the company shuts down. Especially if the company has declared itself bankrupt or its creditors are demanding liquidation. The duty of the insolvency professionals is to carry out the insolvency process with utmost fairness while protecting the rights and privileges of the insolvent organization. Today you can partner with a consulting firm or an insolvency professional agency to help you throughout the process and strictly abide by the norms stated by the Insolvency and Bankruptcy Code.  With this, we hope that you might have gotten a rough idea about who are insolvency professionals and why they are essential during the time of Insolvency.

What is an Insolvency Professional Agency?

To give you a better insight on who is an insolvency professional, you must know what an insolvency professional agency is. Any agency registered under the IBC  insolvency code is referred to as an IBC professional agency.

The main objective of these agencies is to conduct and supervise the activities during the Insolvency and dissolutionand monitor their insolvency professionals. These professional experts comply with the terms and conditions mentioned by the IBC code implemented by the IBBI (Insolvency and Bankruptcy Board of India).

The complaints made under section 217 of the insolvency code is IBBI's way to exercise control over the Insolvency professional agency and its professionals.

What is the Eligibility Criteria for Someone to Become an Insolvency Professional?

To become an insolvency resolution professional, one should be:

  • A permanent resident of India and is a legal adult of 18 years or more.
  • He/she is mentally sound and stable, that is declared fit by doctors.
  • They must have never been insolvent at any point in their life. In other words, they have a clear track record and no history of bad debts. 
  • Has the needed qualification and experience as mentioned by the IBBI.
  • Has never been sentenced by any competent court/law for an offence punishable with imprisonment for a term exceeding six months or for a crime involving moral turpitude, and five years have not passed from the expiry of the sentence.

Qualification and Experience of the Insolvency Professionals 

First things first, in order to be eligible for the position of an insolvency professional, he/she must get themselves registered with an insolvency professional agency. After that, they must have acquired the following qualifications and experience:

  • They must either clear the National Insolvency Examination (or)
  • Qualify the Limited Insolvency Examination, in which case it is necessary for the applicant to have 15 years of experience in management after finishing a Bachelor's degree from a university established or recognized by law (or)
  • Has qualified the Limited Insolvency Examination along with having 10 years of experience as–
  • A chartered accountant and are also a member of the Institute of Chartered Accountants of India (or)
  • A company secretary plus a member of the Institute of Company Secretaries of India (or)
  • A cost accountant, along with being a member of the Institute of Cost Accountants of India (or)
  • Is a registered advocate under a Bar Council

Once the above-mentioned requirements and qualifications are met, the applicant can start practising as an Insolvency professional.

What are the roles and the responsibilities of the Insolvency Professionals? 

The main function of the Insolvency Professionals is to evaluate the company's financial situation, partnership, LLPs, individuals, etc., and to ensure a smooth process of its dissolution. These experts, in certain possible cases, look for prospects to save businesses. Otherwise, the primary functions of the Insolvency Professionals are as follows:

  • Evaluate, examine the financial statement of an organization and also deeply understand the situation.
  • Make all the necessary arrangements to conduct the sale of all the assets owned by the liquidating Individual or firm.
  • Know and acknowledge all the receivables position of the company/Individual and look after the distribution and collection process.
  • Carry out formal discussions with debtors/creditors and oversee their settlement procedure.
  • Verify and agree on all the claims made by the creditors as per the available funds. This is one of the most important duties of Insolvency professionals.
  • Participate in the fund distribution process after putting aside the money needed to initiate the cost of liquidation.
  • Manage and deal with the other competing interest, if any.
  • The Insolvency professionals must present a report to the National Company Law Tribunal for the following:
  • A report consisting of the Liquidation plan and process
  • Detailed report on the asset memorandum.
  • Provisional report on how the liquidation process is advancing from time to time.
  • Specifics about the sale of all the assets.
  • Dialogue with the Debtors and Creditors and the conclusions reached.
  • Final report before the dissolution of the company, partnership and others.

How TRC Helps In The Insolvency Resolution Process?

At TRC Corporate Consulting, we focus on providing you with a personalized solution and preparing customized services as per your business requirement. So, be it liquidation process, Insolvency resolution, or financial advisory services, delivering the best services to you is our utmost priority. Our professionals also offer additional services such as 29 A Verification, Collation of claims, and much more.

We have a team of expert Insolvency professionals who follow, analyze and approach with impartial understanding before taking any further steps and keep you informed by updating you on everything about the proceedings. To know more about our insolvency services, contact us now!

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