Insolvency professionals may be allowed to undertake 10 assignments at a time

The Insolvency and Bankruptcy Board of India (IBBI) proposes to increase the number of assignments an individual insolvency professional can undertake at any point of time to 10 from five earlier. As per the proposal, out of the 10, not more than three will have admitted claims exceeding Rs 1,000 crores each. The overall limit of 10 assignments include any of the roles such as Interim Resolution Professional (IRP), Resolution Professional (RP) in a CIRP, liquidator in liquidation process, RP in personal guarantor matters, etc.

The IBBI argues that insolvency professionals (IPs) have been undertaking assignments in multiple roles as IRP, RP in a CIRP, liquidator in liquidation process, RP in personal guarantor matters, etc. Taking note of the responsibility entrusted upon an IP for each of the roles, it is considered expedient that the restriction to be extended to more assignments so that IP is able to devote time and resources efficiently.

The insolvency regulator also proposes that each partner of an Insolvency Professional Entity (IPE) acting as IPs can undertake five assignments at a time (excluding the assignments taken by an IP in his individual capacity).

However, number of assignments for an IPE acting as IP at any point of time shall not be more than 15 assignments having admitted claims exceeding one thousand crore rupees each. The overall limit includes all the assignments of an IPE acting as IP.

Giving the rationale for this proposal, the IBBI argues that with the introduction of provisions allowing IPE to act as IP, limits mandated for insolvency professionals will also apply to these IPEs. However, an IPE has more than one individual working as its partner or director. The application of exiting limit on the assignments for an IPE acting as IP would not be commensurate with its services offered.

The IBBI has also proposed changes to the way that disciplinary proceedings are initiated against IPs and IPEs. Currently, if an IP or IPE commits a contravention, disciplinary proceedings can be initiated against both the individual and the entity. However, the IBBI believes that this is unfair to the other partners or directors of an IPE who may not have been involved in the contravention. The IBBI has therefore proposed that disciplinary proceedings should only be initiated against the individual or entity that was directly involved in the contravention.

Also Read: IBBI simplifies enrolment, registration process of insolvency professionals