Regulator issues guidelines for selection of panel for insolvency professionals

In order to reduce the delay by the Insolvency and Bankruptcy Board of India (IBBI) in recommending insolvency professionals who could act as Interim Resolution Professional, Resolution professional or administrator, the IBBI had put out guidelines for selection of IP panels and share the details of the panels with adjudicating authorities for ready reference.

The Panel, which will have a validity of six months, is going to have zone-wise list of IPs based on the registered office (address as registered with the Board) of the IP. A new Panel will replace the earlier panel every six months.

The NCLT may pick up any name from the Panel for appointment of IRP, Liquidator, RP or BT, for a corporate insolvency resolution plan, liquidation process, insolvency resolution or bankruptcy process relating to a corporate debtors and personal guarantors to corporate debtors, as the case may be. Similarly, the DRT may pick up any name from the Panel for appointment as RP or BT, for an Insolvency Resolution or Bankruptcy Process for personal guarantors to corporate debtors, as the case may be.

Inclusion of IP in the panel

According to the guidelines, an IP will be eligible to be in the panel, if there is no disciplinary proceeding, whether initiated by the Board or the IPA of which he is a member, pending against him,  he has not been convicted at any time in the last three years by a court of competent jurisdiction, he expresses his interest to be included in the Panel for the relevant period; he undertakes to discharge the responsibility as IRP, Liquidator, RP or BT, as he may be appointed by the AA, and he holds an Authorisation for Assignment (AFA), which is valid till the validity of panel.

The IPs must respond to through email to IBBI’s invitation for expression of interest from IPs.

The eligible IPs will be included in the Panel in the order of the volume of ongoing processes they have in hand. The IP who has the lowest volume of ongoing processes will get a score of 100 and will be at the top of the Panel. The IP who has the highest volume of ongoing processes will get a score of 0. The difference between the highest volume and the lowest volume will be equated to 100and other IPs will get scores between 0 and 100 depending on volume of their ongoing assignments.

Obligations of IPs in the Panel

It must be explicitly understood that an IP, who isincluded in the Panel based on his expression of interest, should not:

• withdraw his interest to act as IRP, Liquidator, RP or BT, as the case may be;
• decline to act as IRPs, Liquidator, RP or BT, as the case may be, if appointed by the AA;
• surrender his registration to the Board or membership or AFA to his IPA during the validity of the Panel.

An IP in the Panel can be appointed as IRP, Liquidator, RP or BT, at the sole discretion of the adjudicating authority. The submission of expression of interest is an unconditional consent by the IP to act as an IRP, Liquidator, RP or BT of any process relating to a corporate or individual debtor, as the case may be and that an IP who declines to act as IRP, Liquidator, RP or BT, as the case may be, on being appointed by the adjudicating authority, will not be included in the Panel for the next five years, without prejudice to any other action that may be taken by the Board.

These guidelines will come into effect for appointments as IRP, Liquidator, RP and BT with effect from 1 July 2021.

Also Read: Is there a need for basic guidelines on fixing insolvency professionals’ fee?