Appointment of a Resolution Professional under IBC 2016. The Insolvency and Bankruptcy Code (IBC) 2016, a watershed legislation, introduced a structured framework to address insolvency in India. A pivotal role in this framework is played by the Resolution Professional (RP). Here, we delve deep into the procedure of appointing an RP under the IBC, underscoring its importance in the insolvency resolution process.
Who is a Resolution Professional?
The National Company Law Tribunal (NCLT) appoints a Resolution Professional (RP) once it accepts the insolvency application. The RP is a certified professional responsible for overseeing the insolvency proceedings, ensuring they operate smoothly, transparently, and according to the Code’s stipulations.
Procedure for Appointment of Resolution Professional
- Initiation of CIRP:
- Appointment of Interim Resolution Professional (IRP):
- In the initial phase, the creditor initiating the process can suggest an Interim Resolution Professional (IRP). The NCLT then verifies and appoints the IRP within 14 days from the insolvency commencement date.
- Formation of Committee of Creditors (CoC):
- One of the first tasks of the IRP is to form the Committee of Creditors (CoC), which comprises all financial creditors.
- Appointment of Resolution Professional by CoC:
- The CoC, in its first meeting, decides whether to continue with the IRP as the Resolution Professional or replace them with another RP. This decision requires a 66% voting share of the CoC.
- If the CoC decides to replace the IRP, they have to propose another RP, whose name should be intimated to the NCLT and the Insolvency and Bankruptcy Board of India (IBBI) for approval.
- Replacing the Resolution Professional:
- If the CoC is unsatisfied with the RP during the CIRP, they can propose a replacement through a similar procedure, requiring a 66% majority vote. They then submit the new RP’s name to the NCLT for approval.
Qualifications of a Resolution Professional
- Registration with IBBI: The professional must be registered with the IBBI and pass the insolvency professional examination.
- Experience: A certain number of years of experience in finance, law, management, insolvency, or similar fields is mandatory.
- Clean Record: They should not have been convicted of any offense in the preceding five years.
Importance of the Role
The RP plays a crucial role in:
- Protecting and preserving the assets of the debtor.
- Managing the operations of the debtor during the CIRP.
- Complying with the information requirements and cooperating with the CoC.
- Conducting meetings and assisting the CoC in the resolution process.
The appointment of a Resolution Professional is a fundamental step in the insolvency resolution process under the IBC 2016. It ensures that the process runs seamlessly and that the interests of all stakeholders are balanced. Understanding the intricacies of this appointment underscores its pivotal role in achieving the objectives of the IBC.
Tags: #IBC2016 #ResolutionProfessional #InsolvencyResolution #NCLT #IBBI #CorporateInsolvency