IRP/RPs can appoint any professional for assistance in insolvency proceedings
A resolution professional conducting corporate insolvency resolution process (CIRP) will have to disclose all former names and registered office address(es) so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the corporate debtor (CD), in all its communications and records.
This was part of the latest amendments in the Insolvency and Bankruptcy laws notified by the Insolvency and Bankruptcy Board of India (IBBI).
Explaining the rationale of the amendments, the Board said that a corporate debtor (CD) may have changed its name or registered office address prior to commencement of insolvency, and that the stakeholders may find it difficult to relate to the new name or registered office address and consequently fail to participate in the CIRP.
In another amendment, the Board has allowed the interim resolution professional (IRP) or resolution professional (RP) to appoint any professional, including registered valuers, to assist him in discharge of his duties in conduct of the CIRP.
“The amendment provides that the IRP/RP may appoint a professional, other than registered valuers, if he is of the opinion that the services of such professional are required and such services are not available with the CD,” says the Board.
Such appointments will be made on an arm’s length basis following an objective and transparent process. The invoice for fee shall be raised in the name of the professional and be paid into his bank account.
In yet another amendment, it has been said that the resolution professional is duty bound to find out if a CD has been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the Adjudicating Authority seeking appropriate relief.
This not only claws back the value lost in such transactions increasing the possibility of reorganisation of the CD through a resolution plan, but also disincentivises such transactions preventing stress to the CD.
For effective monitoring, the amendment requires the RP to file Form CIRP 8 on the electronic platform of the Board, intimating details of his opinion and determination in respect of avoidance transactions. The IBBI has specified the format of CIRP 8. This Form needs to be filed in respect of every CIRP ongoing or commencing on or after 14July 2021.
Also See: Why IBBI is keeping a close eye on fees charged by insolvency professionals
