Role of Insolvency Professional under the IBC Regulations
In administering the resolution outcomes, the role of the IP encompasses a wide range of functions, which include adhering to procedure of the law, as well as accounting and finance related functions. The latter include the identification of the assets and liabilities of the defaulting debtor, its management during the insolvency proceedings if it is an enterprise, preparation of the resolution proposal, implementation of the solution for individual resolution, the construction, negotiation and mediation of deals as well as distribution of the realisation proceeds under bankruptcy resolution. ”
Managing the Corporate Debtor under the IBC Regulations
- Going Concern as IRP/RP
- Interim Finance
- Statutory Compliances
- Understanding and managing the
- Corporate Finances
- Dealing with hostile situations
Duties of an Interim Insolvency Professional – Section 18 under the IBC Regulations
- Collect - Collect information relating to assets , finances and operations of the CD.
- Receive - Receive , collate , all claims.
- Constitute - Constitute the CoC.
- Monitor - Monitor the assets of the
- Take - Take control and custody of any assets over which the CD has ownership rights.
Pre assignment activity under the CIRP as per IBC Regulations
To be forewarned is to be forearmed
- Research about the CD
- MCA master data
- BSE WEBSITE for Listed entities
- CD website , if any
- General Google search on the CD, Group entities, if any
Meeting the Suspended Directors under the CIRP as per the IBC Regulations
- Composition of IRP team-
- Explain your role
- Important to set the right tone.
- Meet Directors, KMP
Assessment of Situation under the CIRP as per the IBC Regulations
- Gather information about
- Manufacturing units/ branch
- Bank account details
- Any matter requiring immediate attention
- Ongoing litigation- EPF, Income Tax,Labour Commissioner
- Accounting software- backup
Taking custody of manufacturing Unit/ Branch under the CIRP as per the IBC Regulations
- Ensure presence of Director / KMP at the time of taking custody.
- Technical person for detailed inventory.
- Meeting with executives at plant.
- Engage technical person
- Take custody of inventory management.
Check on validity of licenses, insurance policies under the CIRP
- Get - Get copies of existing policies
- Review - Review whether
- Ensure - Ensure safety of personnel appointed at the site.
- Verify - Verify whether personal security is necessary.
- Discuss about - Discuss about need for insurance with CoC.
Meeting with HR and Union Leader under the CIRP
- Crucial to win confidence
- Assure continuity of employment
- Identify disgruntled employees
- Beware of decoys
- Share contact details and be accessible
Setting up MIS system under the CIRP
- Set up a daily system of reporting
- Video Calling the site
- Daily report on
- Cash Position
Assessment of Existing Security Arrangement
- Preferable to replace existing security agency.
- Explore feasibility of installing CC cameras, take custody of IP protocol of existing CC camera.
Assess pendency of bills for essential Services and other Vendors
- Pending Bills for Electricity and Other Utility Bills.
- Meet officials of Electricity Department , Explain provisions of the code relating to pre CIRP costs.
- Assure prompt payment of bills during the CIRP/ Explain the provisions relating to CIRP cost.
- Move application before AA seeking direction to Electricity Department , if necessary.
Intimations to concerned parties of commencement of CIRP
- Suspended directors
- Public Announcement
- Form INC 28 to be filed
- Follow up with IBBI for change of status in Master data in accordance with Circular of MCA dated 06.03.2020
- All Banks with whom CD is maintaining account
- Statutory Authorities
- Stock Exchanges
Appointment of Valuer under the CIRP
- Two valuers to be appointed for each class of asset.
- Visit site with the Valuer.
- Ensure all critical aspects are discussed.
- On receipt of the valuation reports, compare and analyse the two sets.
- Understand the rationale of both the Valuers, where there is large disparity.
- Where differences are irreconcilable, appoint a third Valuers.
Disciplinary Order in the matter relating to custody of Assets under the CIRP
- The DC finds that the RP’s conduct, in not making material efforts to identify and to take control of assets of CD as also is not filing application under section 19(2) for non-cooperation of the ex-directors, reflects his professional incompetence and negligence. Further, ____did not make sincere efforts to take control and custody of the lands of the CD despite the statutory duties under sections 18(1) and 25(1)(a) as observed by the AA in its order dated 29.10.2018. Thus _____admittedly failed to take control and custody of the property of CD which frustrated the whole CIRP process and the CD was pushed into liquidation.