The role of a Resolution Professionals can be considered as a Business Solution provider in the context of Insolvency Process. Under IBC Resolution Professional is appointed to manage the business of entity/person which is undergoing insolvency which could be CIRP, FFIRP, Liquidation etc. RPs play a very crucial to ensure that resolution process is conducted in a fair and time bound manner for maximization of values of assets and protection of livelihoods of its employees/workers.
As a Resolution Professionals their role extends beyond managing insolvency proceedings, they also act as a Business Solution Provider. If we talk about Duties of RPs, stake of each stakeholder of the entity is lies in the hands of RPs. So here it is the moral/fiduciary duty of the RPs to act in good faith, maintain integrity and uphold honesty throughout the resolution process for all the stakeholders. RPs act as a Business Solution Provider by performing below duties:
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1. Assessment and Findings:
Financial Health: It is the duties and responsibilities of the RPs to assess the financial health of the company so that clear picture of the entity can be analyzed. RPs thoroughly put their efforts to review all financial records of the company to form an opinion about Company’s Financial Health.
Operational Health: RPs evaluate the operational health of the company to run the business as a Going concern. They do the comprehensive analysis of the various operational facts, which may include: Quality controls, Logistics, Production Process, Risk Management, Operational strengths and weaknesses, Contingencies etc. based on the industry.
2. Stakeholders Management:
RPs play a pivotal role in stakeholder management. They work independently for all the stakeholders of the CD which includes, debtors, creditors, employees/workers, suppliers, customers, Regulatory authorities and Potential Resolution Applicants.
RPs put all their efforts to run the company as a Going concern so that they can preserve its value, protect the interest of stakeholder and ensuring the continuity of company’s operations. RPs aims to save the company from going into liquidation.
3. Legal and Compliance Work:
RPs ensure that during the insolvency process all the legal and regulatory compliances related to business entity is complied. Seek advice from legal, Valuer, regulatory and other experts for the related industry to ensure adherence to all the regulations and guidelines to run the company.
Ensures maintaining up-to-date accounts with the help of the experts is the fundamental to ensuring transparency and trust throughout the process. RPs should ensure that the entity’s financial records are accurate and up to date. This approach will enhance the credibility of the resolution process.
4. Process Restructuring:
RPs put all their efforts to identify the best way to run the operations of the company in the given circumstances and restructure the processes as well by implementing the cost- cutting measures.
Streamlines the business process to enhance the productivity and efficiency. Negotiate with the creditors to manage the funds of the entity.
Facilitates the fund raising of the entity so that entity funds can be managed and business of the entity can be run as a going concern.
5. Turnaround Management:
Identify the situation where immediate attention is required to manage the crisis of the entity.
For example: If there is any situation like Labor Union is on strike and to run the business all labor has to be back on the work in that case RP with the help of existing team or experts can negotiate with the Union so that work can be resumed.
The other potential hostile situations are while dealing with workers. They are insecure due to the development, the promoters/ Directors, invariably does not meet them or communicates with them after commencement of CIRP and in most of the cases their wages are pending and the financial situation on the personal front is precarious.
The workers should be made to understand that the RP is appointed to revive the company and he is looking forward to their support in this journey.
6. Communications and Transparency:
It is the duty of the RPs to provide regular updates to all the stakeholders like Financial Creditors, Operation creditors or their Representatives, Government Authorities, AA etc. about the situation and process of the Resolution Process.
RPs shall maintain the transparency during the complete process of the insolvency resolution. This practice will build trust and alignment with the stakeholders which will facilitate the smooth progress of insolvency resolution process.
7. Verification of claims:
The role of Resolution Professionals is very critical in acknowledging and verifying the claims received from Financial Creditors (Secured/Unsecured), Operational creditors, Employees/Workmen, Government Authorities and others.
RPs should thoroughly scrutinize the documents received related to claims like: Documents of charge (in case of Secured Creditors), Agreements copy, Proof of debts, contracts, other relevant financial documents as applicable/available.
8. Expression of Interest:
Form G Under IBC is use to invite expression of interest (EOI) for Resolution Plans for a Corporate Debtor. It serves as a comprehensive document providing essential information to attract potential resolution applicants who can offer viable solutions for the CD’s financial troubles.
This form contains all the details which ensures transparency about the company/person to the prospective resolution applicants with the necessary information to submit their Expression of Interest. Examples: Last 2 years complete financials, Operation and financial health of the entity, Fixed assets details etc.
RPs shall provide the detailed expression of interest by sharing all the relevant and critical details asked by Prospective Resolution Applicants to that they can take the best decision by analyzing the actual Financial and Operational Health of the company.
9. Analysis of Resolution Plans:
As a Resolution Professionals, it is a very crucial role to select the best Resolution Plan by applying analysis skill, taking help of industry experts wherever required. Below are some points which RPs Shall consider while selecting the Plan to put for COC’s approvals:
- Legal and Regulatory
- Eligibility checks as per section 29A of the
- Business Continuity
- Financial Viability
- Impact on stakeholders (Like %age of haircut ) etc.
10. Implementation of Approved Resolution Plan:
Once approved by COC it is the duty of the RPs that it is implemented smoothly by regular monitor the progress of the plan. RPs shall ensure that plan is executed effectively, continuously monitoring progress to compliance with legal requirements.
Regularly track the progress of plan, identify the risks that can impact the successful implementation of resolution plan. And maintain the communications with all the stakeholders.
This approach helps ensure that the objectives of the resolution plan are met, leading to sustainable growth of the company.
Absolutely, RPs Play a vital role in the insolvency process as a Business Solution Provider.
Disclaimer: This article is for education purpose only. No copyright infringement intended.
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