IBBI Circular: Insolvency Professionals’ Declarations – Form C Clarification

Introduction: The Insolvency and Bankruptcy Board of India (IBBI) recently issued Circular No. IBBI/II/62/2023, dated 21st December, 2023, addressing insolvency professionals’ declarations in the application process for the initiation of insolvency resolution processes. The circular aims to provide clarity on the submission of particulars and declarations in Part IV of Form C of the IRP PGCD Rules.

Detailed Analysis:

1. Background: The circular references Section 95 of the Insolvency and Bankruptcy Code (Code) along with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (IRP PGCD Rules). This allows creditors to file applications for the initiation of insolvency resolution processes for personal guarantors to corporate debtors.
2. Filing Options: Creditors can file applications independently, jointly with other creditors, or through a resolution professional (RP) using Form C of the IRP PGCD Rules. The circular emphasizes that when the application is filed through an RP, the RP’s particulars and declarations are crucial and are documented in Part IV of Form C.
3. RP Appointment Process: The Adjudicating Authority (AA) reviews RP applications and, after confirming no disciplinary proceedings against the RP, appoints them through an Order under subsection (5) of section 97 of the Code. This emphasizes the importance of RP credibility in the insolvency resolution process.
4. Creditor-Proposed RP: In cases where creditors file applications, suggesting the name of the insolvency professional to be appointed as RP, the circular clarifies that the proposed RP should provide the necessary particulars and declarations in Part IV of Form C. This ensures uniformity in the information presented to the AA.
5. Exercise of Authority: The circular concludes by asserting that these guidelines are issued under the authority granted by Section 196 of the Code. This signifies the regulatory framework’s commitment to maintaining transparency and accountability in the insolvency resolution process.

Conclusion:

The IBBI’s recent circular serves as a crucial clarification regarding the submission of particulars and declarations by insolvency professionals in the application process for initiating insolvency resolution processes. By highlighting the significance of RP details, whether proposed by creditors or filing independently, the circular contributes to a streamlined and transparent insolvency resolution framework. The emphasis on adherence to rules and declarations underscores the IBBI’s commitment to fostering a robust and accountable financial ecosystem. Entities involved in the insolvency process are encouraged to adhere to these guidelines for a smoother and more efficient resolution process.

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Insolvency and Bankruptcy Board of India
7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001

Circular No. No. IBBI/II/62/2023 Dated: 21st December, 2023

To
All Registered Insolvency Professionals
All Recognised Insolvency Professional Entities
All Registered Insolvency Professional Agencies
(By mail to registered email addresses and on the website of the IBBI)

Dear Madam/Sir,

Sub: Clarification regarding submission of particulars and declaration by the insolvency professionals in the application filed by creditor(s) in Part IV of Form C of the IRP PGCD Rules.

Section 95 of the Insolvency and Bankruptcy Code (Code) read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (IRP PGCD Rules) allows the creditor to file an application for initiation of insolvency resolution process of personal guarantors to corporate debtors. The creditor may file the application either himself or jointly with other creditors or through a resolution professional (RP) in Form C of the IRP PGCD Rules.

2. Where the application is filed through an RP, the particulars and declaration by such RP are provided in Part IV of the Form C of the IRP PGCD Rules. In such cases, the Adjudicating Authority (AA) after confirming that there is no pendency in respect of disciplinary proceedings against the RP from the database shared by the Insolvency and Bankruptcy Board of India, appoints the proposed RP by an Order under sub-section (5) of section 97 of the Code.

3. In certain cases, the creditor may file the application itself recommending the name of the insolvency professional to be appointed as RP. It is hereby clarified that in such cases, the insolvency professional proposed to be appointed as RP shall also provide the particulars of and declaration in Part IV of Form C of the IRP PGCD Rules to the creditor for the consideration of the AA.

4. This is issued in exercise of the powers under section 196 of the Code.

Yours faithfully,

-Sd-

(Sushanta Kumar Das)
Deputy General Manager
Email: [email protected]