Resolution professional Poonam Basak suspended for 3 years for undermining CIRP of Kings Electronics

The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) has suspended the registration of resolution professional Poonam Basak for a period of three years. The DC found that Basak had contravened the provisions of the Insolvency and Bankruptcy Code (IBC) and the Insolvency Professionals Regulations (IPR) in the conduct of the CIRP of a corporate debtor.

The DC found that Poonam Basak had not counted the votes of two major creditors — Union Bank of India (18.1% voting share) and Bajaj Finserv Ltd (14.7% voting share) — in the e-voting for the replacement of the resolution professional. This had the effect of preventing Basak from being replaced, even though the majority of creditors had voted in favour of her replacement.

The DC also found that Basak had bypassed the commercial wisdom of the creditors’ committee (CoC) and directly filed an application for liquidation of the corporate debtor, without the approval of the CoC. This was despite the fact that the CoC had filed an application for the extension of the CIRP period.

The DC held that Basak’s actions had caused a delay of one year in the CIRP process, and had damaged the value of the corporate debtor’s assets. The DC also found that Basak had acted with malafide intent, and had failed to act in the best interests of the creditors.

In light of these findings, the DC suspended Basak’s registration for a period of three years. The DC also ordered that a copy of the order be sent to the CoCs of all the corporate debtors in which Basak is providing her services, and to the Indian Institute of Insolvency Professionals of ICAI.

The case pertains to the corporate insolvency resolution process of Kings Electronics Private Limited (CD), in which Poonam Basak was appointed as Interim Resolution Professional (IRP) and later on appointed as resolution professional on 23 December 2019. Later Bijendra Jha was appointed as an RP through an order passed on 23 November 2021 passed by the NCLT, replacing Poonam Basak.

The suspension of Basak’s registration is a significant development, and sends a strong message that the IBBI will take action against resolution professionals who engage in misconduct. The suspension is also a reminder to creditors that they should carefully monitor the conduct of resolution professionals, and take action if they believe that there has been any wrongdoing.

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