Insolvency regulator IBBI has put in place a mechanism to monitor corporate insolvency resolution processes (CIRP) and the performance of insolvency professionals (IPs) in the country.

This is significant as IPs play an important role in the resolution, liquidation and bankruptcy processes of companies, limited liability partnerships, partnership firms, proprietorships and individuals. In fact, IPs exercise the powers of the board of directors of the corporate debtor undergoing CIRP.

The Insolvency and Bankruptcy Board of India (IBBI) has now finalised a set of forms that IPs need to file with the regulator through a separate electronic platform. These forms — a draft of which was put out in the public domain in April 2018 for comments — were devised in consultation with stakeholders and the Insolvency Professional Agency (IPA), sources said.

These forms are expected to facilitate submission of records and information by IPs to the IBBI as well as the monitoring of the processes and the performance of the professionals.

It may be recalled that the insolvency and bankruptcy code (IBC) casts obligations on the IPs to forward/ submit all records relating to the conduct of the CIRP to the IBBI. Also, a copy of the records of every proceeding before the Adjudicating Authority such as NCLT, NCLAT have to be submitted to the IBBI.

IBBI has now said the dedicated electronic platform would be open for filings from September 16 this year. All IPs would also have to electronically file forms (about eight in each case) even in respect of records and information that have become due before September 15. This has to be done by September 30 and in respect of all CIRPs, both closed and ongoing, conducted by the IP concerned.

Action would be taken by the IPA if the IPs concerned fail to file the forms or if there are any delays in the filing of the forms, the IBBI has said.

Raj Rani Bhalla, Partner, M V Kini & Co, a law firm, said that mandating the IPs to file certain forms on the IBBI website is a practice taken from the Companies Act and regulations where event-based filings are to be done within the prescribed period. Non-filing or delayed filing result in penalties and actions, including refusal to issue or renew the ‘authorisation for assignment’ to IPs, she said.

"It is a good practice to monitor the progress of the CIRP and random scrutiny by IPA will further ensure that correct and complete information is being uploaded by the IPs," she added. Apurva Jayant, Partner, L&L Partners, a law firm, said: "We understand that this has been done after public consultation with the RPs and should provide a good oversight tool for IBBI. Dual reporting to NCLT and IBBI may, however, increase the administrative burden for resolution professionals."

Punit Dutt Tyagi, Executive Partner, Lakshmikumaran & Sridharan, a law firm, said that IBBI’s move to introduce mechanism to monitor Insolvency Professionals (IP) will have a positive impact on the insolvency resolution process and how the IBC is perceived.

With the introduction of forms for the regular reporting on the status of resolution process, including disposed of matters, IBBI will be able to rule out any foul play on the part of the IPs in the conduct of resolution process, Tyagi said.

"This will ensure that the proceedings are conducted in a fair and transparent manner, and will boost the confidence of resolution applicants to participate in CIRP. This will in turn benefit the objective of the IBC, i.e. the resolution and revival of stressed companies," he said.

IPs, who are in charge of several responsibilities under the IBC, require monitoring for efficient discharge of duties, according to Tyagi.

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