Know all about Resolution Professional under Insolvency and Bankruptcy Code (IBC), 2016
Contents of the Article:
Resolution Professional (RP)
“Resolution Professional”, means an insolvency professional appointed to conduct the corporate insolvency resolution process and includes an interim-resolution professional;
Provisions Relating to appointment of resolution Professional
The committee of creditors in its first meeting may
(a) appoint the interim resolution professional as a resolution professional or
(b) replace the interim resolution professional by another resolution professional.
It should be noted that for appointment or replacement, voting is required which shall not be less 6 percent.
(a) Appointment of interim resolution professional as resolution professional [Section-22(3)(a) of ibc]
(b) To replace the interim resolution professional, [Section-22(3)(b) of ibc]
Replacement of resolution professional by committee of creditors. [Section-27 of IBC,2016]
Resolution professional to conduct corporate insolvency resolution process. – [Sec-23(1)]
Duties of Resolution professionals :- After appointment of Resolution Professional he shall perform bellow mentioned duties for resolution of the corporate debtor.[Secion-25 of IBc, 2016]
(1) Appointment of valuers – The RP shall appoint two valuers within seven days of his appointment to determine the fair value and the liquidation value of the corporate debtor. After the receipt of resolution plans, the RP shall provide the fair value and the liquidation value to every member of the committee in electronic form, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value and the liquidation value and shall not use such values to cause an undue gain or undue loss to itself or any other person.
(2) Preparation of information memorandum – the RP shall submit the information memorandum in electronic form to each member of the committee within two weeks of his appointment, but not later than fifty-fourth day from the insolvency commencement date, whichever is earlier. The RP shall share the information memorandum only after receiving an undertaking from a member of the committee to the effect that such member shall maintain confidentiality of the information and shall not use such information to cause an undue gain or undue loss to itself or any other person.
(3) Invite prospective Resolution Applicants – The RP shall invite the prospective resolution applicants to submit the resolution plan, by publishing brief particulars of the invitation for expression of interest in Form G of the Schedule at the earliest and not later than seventy-fifth day from the insolvency commencement date. Where the RP did not invite prospective applicants for the resolution plan and no reason was given by RP for the same and accordingly, the committee of creditors jumped into liquidation even though one month was left in the completion of initial period of 180 days. The NCLT held that the RP is violating his duties as specified in 25(2)(h) of the Code and declined the liquidation application and directed the RP to invite the expression of interest.6
(4) Due Diligence – The RP shall conduct due diligence based on the material on record in order to satisfy that the prospective resolution applicant:
(5) Preparation of Provisional List of Resolution Applicants – The RP shall issue a provisional list of eligible prospective resolution applicants within ten days of the last date for submission of expression of interest to the committee and to all prospective resolution applicants who submitted the expression of interest.
(6) Request for Resolution Plan – The RP shall issue the information memorandum, evaluation matrix and a request for resolution plans, within five days of the date of issue of the provisional list to –
The request for resolution plans shall allow prospective resolution applicants a minimum of thirty days to submit the resolution plan(s).
(7) Submission to the Committee of creditors – The RP shall submit to the committee all the resolution plans which comply with the requirements of the Code and regulations made thereunder along with the details of:- (a) preferential transactions under section 43; (b) undervalued transactions under section 45; (c) extortionate credit transactions under section 50; and (d) fraudulent transactions under section 66, if any, observed, found or determined by him and the orders, if any, of the adjudicating authority in respect of such transactions.
(8) Submission of approved Resolution Plan – The RP must endeavour to submit the resolution plan approved by the committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process under section 12, along with a compliance certificate in Form H of the Schedule. Rejection or approval of a resolution plan is a right of committee of creditors and resolution professional cannot reject any plan without a decision of Committee of Creditors.7
(9) File Application for avoidance of transactions – Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016 provides for the timeline within which an application for avoidance of preferential, undervalued and extortionate transactions must be made.
On or before the seventy-fifth day of the insolvency commencement date the RP must form an opinion whether the corporate debtor has been subjected to any of the aforesaid transactions.
Where the RP is of the opinion that corporate debtor has been subjected to any transactions, he must make a determination thereof on or before the one hundred and fifteenth day of the insolvency commencement date and shall intimate to the Board.
Where the RP makes a determination as aforesaid, the RP must apply to the adjudicating authority for appropriate relief on or before the one hundred and thirty fifth day of the insolvency commencement date.