Why become an Insolvency Practitioner?
Insolvency is possibly the most demanding career option a professional can undertake. It is certainly one of the most challenging, involving and rewarding.
Insolvency practitioners can find themselves running businesses, constructing and negotiating deals or investigating and advising on the viability of a business and its restructuring (and, sometimes, the integrity of its directors). The work of the insolvency practitioner affects the lives, prospects and livelihoods of both creditors and debtors. Insolvency work is as much about people as it is about figures. Insolvency practitioners need the skills to deal with creditors, anxious directors, concerned employees and a range of other stakeholders in the business. The insolvency scene is always changing. Even in these cases, often regarded as the ‘end of the line’ for businesses, imagination and determination are still needed to preserve as much of the business (and its associated jobs) as possible, or as a last resort to get the best possible price for its assets. Even where a formal insolvency procedure is necessary, in many cases a positive approach to the rescue of businesses and jobs can be taken through the application of administrations, administrative receivership and voluntary arrangements. In the current environment, with personal debt at record levels, it is vitally important individuals get the correct advice about the options open to them to resolve their difficulties. As licensed insolvency practitioners are trained in all aspects of the law and procedure, they are best placed to provide that advice and only they can act as supervisors of individual voluntary arrangements or as trustees in bankruptcies. The profession will be able to rescue increasing numbers of jobs and businesses in recent years, both because of legislative changes and the changing attitudes of creditors. Overall, some 20 per cent of insolvent businesses are rescued in part or as a whole and one in every six insolvent individuals enters a voluntary arrangement as an alternative to bankruptcy.
OPPORTUNITIES IN CORPORATE INSOLVENCY AND RESTRUCTURING
Just like a person requires treatment to treat his disease, a sick company also requires some form of treatment to overcome its problem of debts. This treatment may be in the form of restructuring of a company. Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Alternate reasons for restructuring include a change of ownership or ownership structure, de-merger, or a response to a crisis or major change in the business such as bankruptcy, re positioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring. There are a broad range of opportunities that arise from corporate insolvency and financial restructurings.
1. Spotting and evaluating distressed companies for restructuring and rescue planning.
2. Reviewing the various risks involved in restructuring.
3. Developing risk mitigation strategies.
4. Working out a detailed bankable financial structure of the business.
5. Working out a detailed plan for restructuring the business from all angles.
6. Assessment of distressed assets, cash position, due diligence and turnaround feasibility.
7. Advice on optimum utilization of resources.
8. Drafting insolvency petitions.
9. Representation and registration of sick companies with BIFR.
10. Representation before the Debt Recovery Tribunals.
11. Representation before the NCLT or NCLAT
12. Negotiating settlements.
13. Advisory in relation to a merger or acquisition or takeover.
14. Advisory services to management on an ongoing basis.
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What is the role of insolvency professional? He/She takes up matters relating to insolvency of individuals, partnerships and liquidation of companies.
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How many insolvency professionals does India need? Though there isn’t any clear number, the IPA’s estimates that more than a lac cases relating to insolvency, bankruptcy and liquidation are pending and from now only insolvency professionals can handle these cases.
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The number of Insolvency professionals enrolled till now:
Less than 100 insolvency professionals have been enrolled till now. Enrollment of insolvency professionals has been started from December 1.
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Recognized Insolvency Professional Agency (IPA) The New Insolvency and Bankruptcy Code, 2016 stipulates the maximum time to be taken to liquidate a company to 180 days with an one time extension of 90 days, while earlier it used to take at least four years for the same. With the new law, arises the new opportunities for youth in the form of insolvency professionals. To cater to the huge insolvency and liquidation market and produce insolvency professionals, The Institute of Chartered Accountants of India (ICAI), The Institute of Company Secretaries of India (ICSI) & The Institute of Cost Accountant of India (ICWAI) has been given recognition as an Insolvency Professionals Agency. |
Time factor
Data from World Bank show that the number of years taken to resolve insolvency in major economies such as the US, the UK and China are 1.5, 1 and 1.7 years, respectively, in 2016. For India, the same is 4.3 years.According to officials, the bankruptcy code is a complete departure from the earlier Sick Industrial Companies (Special Provisions) Act, 1985, where there were delays in resolution of cases. “When decisions are taken in a time-bound manner, there is a greater chance that a corporate entity can be saved as a going concern and productive resources of the economy (labour and capital) can be put to best use,” a finance ministry statement said. |
What qualifications do you need to practice as insolvency professional?
An individual shall be eligible for registration, if he –
a. has passed the National Insolvency Examination.
b. has passed the Limited Insolvency Examination, and has fifteen years of experience in management, after he received a Bachelor’s degree from a university established or recognized by law.
c. has passed the Limited Insolvency Examination and has ten years of experience as –
(i) a chartered accountant enrolled as a member of the Institute of Chartered Accountants of India.
(ii) a company secretary enrolled as a member of the Institute of Company Secretaries of India.
(iii) a cost accountant enrolled as a member of the Institute of Cost Accountants of India, or
(iv) an advocate enrolled with a Bar Council.
Limited Insolvency Examination
| Format of Examination
The format of examination is as under: a. The examination will be conducted online (computer-based in a proctored environment); with objective multiple choice questions; b. The duration of the examination will be two hours; c. A candidate will be required to answer 90 questions in two hours for a total of 100 marks; d. There will be negative marking of 25% of the marks assigned for the question; e. Passing mark for the examination is 60%; f. Passing candidates will be awarded a certificate by the Board; g. A candidate will be issued a temporary mark sheet on submission of test paper; and h. No workbook or study material will be provided. |
Frequency of Examination
The frequency of Examination is as under: a. The examination will be available from 100 + locations in the country; b. The examination will be available from 31st December, 2016 between 9:30 AM and 5:30 PM; c. The enrollment for examination will be open from 15th December, 2016. d. A candidate needs to enroll for examination at www.nism.ac.in. He needs to select IBBI-Limited Insolvency Examination and enroll himself for the examination by choosing the time, the day and the examination centre for his examination; e. A candidate needs to provide PAN and Aadhaar to enroll for the examination; and f. A candidate needs to pay examination fee of Rs.1000 (Rupees one thousand only) online on every enrollment. |
The Writer may reached at-
CA ROHIT RUWATIA
Regional Council Member, CIRC
The Institute of Chartered Accountant of India
(Set up under an act of parliament)
Mobile – 9571799999,
E Mail – [email protected]
Author Bio
I am working as a CS in the Company. Can i also act as Insolvency professional if I clear the exam as I have read that IP cannot be in whole time practice.
I have completed 9 years and 3 months post qualifying as CA and was working as a Banker and now into own CA Practise. As per its mandate, CA should have minimum 10 years of experience for becoming a IP and to have an IPE. But is it applicable for an exam? Am I be able to appear for the exam in next 2-3 months or I am required to wait to complete 10 years post qualification. Please update its revert soon
What is the Future as an IP in India??? And What can be the Income of an IP after 5 Years??
Sir
I am a banker working in a RRB
MBA having 11 years of experience in Banks and Insurance
How can i apply and how?
Is there any chance now?
i want to admission.
yes you need to pass limited insolvency exams to be an IP
yes it is required to pass the limited insolvency exam to be an IP
what is the scope of this course?
CA vs insolvency practitioner which is best.
give the model question paper to get an idea about it
good information is it required to pass a limited insolvancy examination for ca s