How will the role of insolvency professionals evolve in future
Despite its flaws, Insolvency and Bankruptcy Code (IBC) has made its mark and brought about sea changes in the creditor and debtor behaviour apart from unlocking value stuck in erstwhile recovery mechanisms. IBC is here to stay, but how will the insolvency regime and the role of insolvency professionals change in future?
Anita Shah Akella, joint secretary, Ministry of Corporate Affairs and an ex-officio member of Insolvency and Bankruptcy Board of India (IBBI) looks into the crystal ball to predict what all will shape the insolvency regulations in future.
We bring you an extract from her Linkedin post, where she charts a future path for insolvency professionals:
Digital Transformation: Anita Shah Akella feels that with advancements in AI and machine learning, many processes in insolvency might become automated. This would mean insolvency professionals may need to focus more on complex decision-making, strategic advising, and negotiation.
Global expertise: As businesses become more interconnected globally, insolvency professionals will likely need expertise in international laws and regulations. Cross-border insolvencies could become more common.
Regulatory Changes: Laws and regulations related to insolvency and bankruptcy could evolve. Professionals will need to stay updated to provide accurate guidance.
Increased Complexity: The joint secretary feels increasing complexity of financial instruments and business structures could make insolvencies more challenging to navigate.
Economic Fluctuations: Economic downturns can increase the demand for insolvency professionals. While it’s hard to predict exact economic conditions 25 years out, it’s certain there will be cycles of booms and busts.
Training and Education: Continuous learning will become even more critical. As the field changes, professionals will need to upskill to stay relevant.
Specialization: Given the increasing complexity, there might be a rise in specialized insolvency professionals who focus on specific industries or types of financial instruments.
Role Expansion: Insolvency professionals might not just be involved in the winding down of businesses. They could play crucial roles in business turnarounds, restructuring, and advisory capacities, aiding businesses to navigate financial difficulties before they become critical.
Ethical Considerations: As with many professions, there will be an increased emphasis on ethics, especially when dealing with financially distressed entities. Professionals will need to ensure they uphold the highest standards of integrity.
Alternative Dispute Resolution (ADR): ADR methods like mediation and negotiation might become more popular as companies seek to avoid lengthy and costly litigation. Insolvency professionals with skills in these areas might be in high demand.
In the end she concludes that while the role of insolvency professionals may evolve over the next 25 years, their expertise will remain crucial. “Adapting to technological changes, regulatory shifts, and the increasing complexity of global businesses will be key to their continued relevance and success,” she says.
Also Read: Liquidation a legitimate means of resolution under IBC
