Introduction: The Insolvency and Bankruptcy Board of India (IBBI) continues its regulatory journey with the recent notification dated January 31, 2024. The “Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2024” introduces significant changes to the existing framework, focusing on the roles and responsibilities of insolvency professionals.
Detailed Analysis:
1. Resignation Clause (New Clause 22A): The amendment introduces a new clause, 22A, allowing insolvency professionals to resign from assignments. However, this is subject to the recommendation of the committee of creditors in a corporate insolvency resolution process, consultation committee in a liquidation process, or the debtor/creditor in the insolvency resolution process of a personal guarantor to the corporate debtor. The resignation needs approval from the Adjudicating Authority, emphasizing a structured exit process.
Explanation: The insolvency professional must continue their duties until the Adjudicating Authority approves the resignation.
2. Engagement of Partners or Directors (Clause 23B): An explanation is added to clause 23B, allowing insolvency professional entities to engage or appoint their partners or directors for assignments, excluding work related to valuation and audit of the debtor. This expands flexibility in managing workload within the professional entity.
Explanation: This clause clarifies that partners or directors can be engaged for tasks unrelated to valuation and audit of the debtor.
3. Service Provision by Insolvency Professional Entities (Clause 23C): Clause 23C undergoes an amendment, renumbering the existing explanation as Explanation 1 and adding a new Explanation 2. The latter explains that insolvency professional entities can provide services, excluding valuation and audit, in connection with assignments undertaken by their partners or directors.
Explanation 1: Remains unchanged, and Explanation 2 provides flexibility for insolvency professional entities in delivering various services for the ongoing assignment.
Conclusion: The amendments introduced by IBBI enhance the operational landscape for insolvency professionals. The structured resignation process, flexibility in engaging partners or directors, and the expanded scope of services by professional entities showcase a commitment to refining the regulatory framework. These changes aim to strike a balance between ensuring accountability and providing practical avenues for professionals to carry out their responsibilities effectively.
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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
NOTIFICATION
New Delhi, the 31st January, 2024
Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2024
No. IBBI/2023-24/GN/REG110.—In exercise of the powers conferred by clauses (aa) and (t) of sub-section (1) of section 196, section 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations further to amend the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, namely: –
1. (1) These regulations may be called the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2024.
(2) They shall come into force on the date of publication in the Official Gazette.
2. In the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, in First Schedule,
(i) after clause 22, the following clause shall be inserted, namely: –
“22A. An insolvency professional may resign from the assignment, subject to the recommendation of the committee of creditors in a corporate insolvency resolution process, consultation committee in liquidation process, the debtor or the creditor in the insolvency resolution process of personal guarantor to the corporate debtor, as the case may be, and the approval of the Adjudicating Authority.
Explanation.– The insolvency professional shall continue to discharge his duties, functions and responsibilities till the approval of resignation by the Adjudicating Authority.”
(ii) in clause 23B, the following Explanation shall be inserted, namely: –
“Explanation.- For the purposes of this clause, the insolvency professional which is an insolvency professional entity may engage or appoint its partners or directors, as the case may be, for or in connection with any work relating to any of its assignment other than work related to valuation and audit of the debtor.”
(iii) in clause 23C, the Explanation shall be renumbered as Explanation 1, and after Explanation 1 so renumbered, the following Explanation shall be inserted, namely: –
“Explanation 2.– For the purposes of this clause, the insolvency professional which is an insolvency professional entity may provide any service, other than service related to valuation and audit, for or in connection with the assignment which is being undertaken by any of its partners or directors, as the case may be.”
RAVI MITAL, Chairperson
[ADVT.-III/4/Exty./728/2023-24]
Note: The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 were published vide notification No. IBBI/2016-17/GN/REG003 dated 23rd November, 2016 in the Gazette of India, Extraordinary, Part III, Section 4, No. 424 on 23rd November, 2016 and were last amended by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2023 published vide notification No. IBBI/2023-24/GN/REG104, dated 18th September, 2023 in the Gazette of India, Extraordinary, Part III, Section 4, No. 643 on 18th September, 2023.
