Common Issues on Monitoring & Peer Review for IPs

Common Issues on Monitoring & Peer Review for Insolvency Professionals (IPs)

Monitoring and peer review are key tools adopted by the Insolvency and Bankruptcy Board of India and Insolvency Professional Agencies to ensure compliance, transparency, and professional conduct by Insolvency Professionals. Common issues observed in Monitoring & Peer Review of Insolvency Professionals are identified Based on IBBI inspection/peer review trends and practical experience, here’s a structured list:

Common Monitoring Issues for Insolvency Professionals

• Non-Compliance with Timelines : Delays in admission of claims, preparation of IM, constitution of CoC, filing with NCLT, submission of progress reports, or CIRP completion.
• Inadequate Record Keeping : Poor maintenance of minutes of meetings, claim registers, public announcements, valuation reports, and correspondence with stakeholders.
• Improper Disclosure : Non-disclosure of relationship/interest with stakeholders. & Non-updation of relationship disclosures on IBBI website within prescribed time.
• Financial Management Lapses : Not opening separate bank accounts for CIRP/Liquidation. & Delay in depositing/appropriating funds with Improper utilization of interim finance.
• Non-Compliance with Reporting : Delay/omission in filing various forms (CIRP Forms, Liquidation Forms, progress reports, compliance certificates). & Incomplete or incorrect information in statutory filings.
• Valuation Issues : Delay in appointment of valuers, Non-adherence to the requirement of two registered valuers. & Discrepancies in valuation methodology or report.
• CoC Related Lapses : Improper conduct of CoC meetings, Absence of agenda papers circulated in time & Incorrect voting calculations or e-voting procedure.
• Fee & Cost Related Irregularities: Non-disclosure of fee and expenses, Charging unreasonable fee without CoC approval & Non-ratification of expenses.

Common Peer Review Issues for Insolvency Professionals

• Documentation Gaps : Missing or incomplete CIRP/Liquidation files. & Poor audit trail for decisions taken.
• Non-Adherence to Ethical Standards: Conflict of interest not avoided. & Inadequate independence in decision-making.
• Non-Standardised Practices : Variations in claim verification, valuation practices, and liquidation processes. & Lack of uniformity in handling avoidance transactions.
• Communication Deficiencies : Lack of timely updates to creditors, CoC, and stakeholders. & Non-maintenance of proper correspondence records.
• Training & Capacity Building Gaps : IPs not keeping themselves updated with latest amendments, case laws, or IBBI circulars. & Lack of use of technology in record keeping and process management.
• Inadequate Compliance Culture : Treating compliance as “formality” instead of integrating it into practice. & Reactive compliance (only after monitoring/inspection notice) instead of proactive adherence.

Compliance & Responsibility Framework for Resolution Professionals

Statutory Basis & Appointment : Section 5(27) IBC  state that RP ( insolvency professional ) appointed to conduct CIRP (includes IRP).

Key powers/duties under IBC:

• • Management/control of CD (Sec. 17, 20).
  • Custodian of assets (Sec. 18).
  • Constitute CoC, convene meetings (Sec. 21–24).
  • Invite/evaluate Resolution Plans (Sec. 25(2)(h), Sec. 30).
  • File avoidance applications (Secs. 43–51, 66).

Regulatory Duties (CIRP Regulations)

• • Custody & control of assets/records with witnesses (Reg. 3A).
  • Access to books, registries, creditors’ data (Reg. 4).
  • Submission of Information Memorandum (Reg. 36).
  • Monitoring Committee involvement post-plan approval (Reg. 38, Feb 2025 amendment).
  • Filing of reports, CIRP forms, disclosures with IBBI/IPA.

Compliance & Ethical Obligations

• • Must comply with Code of Conduct (IBBI IP Regulations, 2016).
  • Maintain integrity, independence, confidentiality, objectivity.
  • Conflict of Interest disclosures to IBBI/IPA/CoC (Reg. 3).
  • Confidentiality of financial/commercial data.
  • Time-bound adherence to CIRP steps (strict timelines).
  • Filing of regular reports, IM, CoC minutes.
  • Liable for disciplinary action, penalties, suspension, prosecution for misconduct.
  • Recognized as “public servants” under PC Act (Jharkhand HC, 2025), hence public accountability applies.

Special Sectoral Responsibilities (Post–2025 Real Estate Amendments)

• • Project-wise CIRP → ring-fence assets/liabilities per project.
  • Separate books & bank accounts per project (Reg. 4D).
  • Homebuyers = financial creditors with CoC participation.
  • Invite resolution plans per project.
  • Coordinate with RERA, local authorities.
  • Handover possession of units to allottees (Reg. 4E).
  • Submit reports on development rights (Reg. 30C).

Common Non-Compliance Issues (Judicial Observations)

• • Failure to verify Section 29A eligibility of applicants.
  • Non-filing of avoidance applications (Secs. 43–51).
  • Inadequate engagement with operational creditors (esp. homebuyers).
  • Poor documentation/record keeping.
  • Delay in disclosures & filings.

Insolvency professionals should follow the good practices under IBC :

IP must maintain robust documentation for every decision. IP Ensure timely filings with IBBI, IPA, and NCLT. IP must Adopt transparency in fees and expenses. IP should keep regular disclosures updated on the IBBI portal. IP Strengthen stakeholder communication with proper records. IP Invest in continuous learning (case laws, amendments, circulars). They must use digital tools for record keeping, claim verification, and reporting.

S.NO.	Stage	Compliance Requirement	Timeline / Frequency	Disclosure / Reporting
1	CIRP	Public Announcement	Within 3 days of IP appointment	To public & IBBI in Form A
2	CIRP	Submission of CIRP Form-1	Within 7 days of commencement of CIRP	To IBBI
3	CIRP	Constitution of CoC	Within 30 days of commencement of CIRP	To NCLT & IBBI (CIRP Form-2)
4	CIRP	First CoC meeting	Within 7 days of CoC constitution	To CoC members
5	CIRP	Filing of progress report with NCLT	Every 30 days (till completion)	To NCLT
6	CIRP	Preparation of Information Memorandum	Within 54 days of commencement	To CoC, updated regularly
7	CIRP	Appointment of Registered Valuers	Within 7 days of appointment	To CoC, IBBI
8	CIRP	Filing of avoidance transaction applications	Immediately upon detection, before plan approval	To NCLT
9	CIRP	Submission of CIRP Form-6 (monthly)	By 10th of following month	To IBBI
10	CIRP	Final report / resolution plan to NCLT	Before 180/330 days as applicable	To NCLT & IBBI
S.NO.	Stage	Compliance Requirement	Timeline / Frequency	Disclosure / Reporting
1	Liquidation	Public Announcement of Liquidation	Within 5 days of order of liquidation	To public, IBBI & ROC
2	Liquidation	Opening of liquidation bank account	Immediately after order	Maintain separate liquidation account
3	Liquidation	Submission of Preliminary Report	Within 75 days of commencement	To NCLT & IBBI
4	Liquidation	Asset Memorandum preparation	Within 75 days of commencement	To NCLT & IBBI
5	Liquidation	Valuation of assets by two valuers	Within 30 days of commencement	To NCLT & IBBI
6	Liquidation	Progress Reports (quarterly to NCLT/IBBI)	Every quarter	To NCLT & IBBI
7	Liquidation	Stakeholder consultation committee meetings	As per regulation (quarterly/half-yearly)	To Stakeholder Committee
8	Liquidation	Final Report on dissolution	At completion of liquidation	To NCLT & IBBI
S.NO.	Stage	Compliance Requirement	Timeline / Frequency	Disclosure / Reporting
1	Voluntary Liquidation	Declaration of solvency by directors	Before passing resolution	By company directors to ROC & Liquidator
2	Voluntary Liquidation	Special Resolution by members	Within 4 weeks of declaration	To ROC & members
3	Voluntary Liquidation	Appointment of Liquidator & public announcement	Immediately on initiation	Public announcement by liquidator
4	Voluntary Liquidation	Final Report to NCLT/IBBI for dissolution	At completion of process	To NCLT & IBBI

Duties of the Resolution Professional (RP) in Relation to Claims

Statutory Provisions

• Section 15 IBC → Public announcement inviting claims within 3 days of RP/IRP appointment.

• Section 18 IBC → Collect all claims submitted by creditors.

• Section 25 IBC → Duty to collate claims and maintain updated records for CoC.

Regulatory Framework (CIRP Regulations, 2016)

• RP’s role is administrative, not adjudicatory – RP cannot decide legal disputes about claims but must verify documents with diligence. Courts (NCLT/NCLAT/SC) emphasize:

  • Transparency  ensure fair opportunity to creditors.

  • Impartiality  avoid bias while verifying/rejecting claims.

  • Timeliness non-adherence to claim timelines jeopardizes CIRP schedule.

  • Objective approach rely on authentic evidence; disputed claims may be referred to adjudicating authority.

Updated CIRP Compliance Tracker (2025)

• Forms CP-1 to CP-5 replace older forms.
• Monthly reporting cycle introduced.
• Transition provisions for ongoing and closed CIRPs.