IBC What are the key factors to an effective Section 29A Due Diligence

What are the key factors to an effective Section 29A Due Diligence

What are the key factors to an effective Section 29A Due Diligence

IBC Section 29A - Due Diligence of Resolution Applicants

IBC 2016 Section 29A has establishing as one of the key essential laws in determining the eligibility of Resolution Applicants in the CIRP.

The IBC, in its initial form had not inserted any regulations to prevent defaulting promoters via repurchasing or buying-back corporate debtor, which could occur potentially at substantial discounts.  

A change in the IBC Code via subsequently inserted Section 29A with retroactive effect as of Nov 23, 2017,

2nd amendment to the IBC Code, applicable w.e.f. from June 6, 2018, which covered IBC amendments to Section 29A. IBC Regulation 36A(8) of the CIRP Regulations, among other things, Needs the Insolvency professional to successfully completion of due diligence of the prospective Resolution applicants according to the regulations of IBC Section 29A.

Supreme Court explains & reinstates the essential laws of conducting a via due diligence U/s 29A of IBC law.

  • Following noted Quoted by Supreme Court, “great care must be taken to ensure that persons who are in-charge of the corporate debtor, for whom such resolution plan is made, do not come back in some other form to regain control of the company without first paying off its debts.”
  • Supreme Court judgment also asserts that the Resolution Professional needs to confirm that a resolution plan, among other things, does not contravene the provisions of Section 29A.

Key Success Factors to an effective Section 29A Due Diligence

  • Due diligence conduct under section 29A is the responsibility of the insolvency professional. It is not sufficient for a prospective Resolution Applicant to provide an affidavit stating that they are entitled to submit a resolution plan under Section 29A. To determine eligibility,  appropriate due diligence on the prospective Resolution Applicants and its linked parties must be carried out effectively and within the specified timeframe.
  • •The insolvency professional should ask potential Resolution Applicants for explanations or additional details or documents If necessary for doing the due diligence under the above section. When approving or rejecting a resolution plan, the CoC should appropriate review report under due diligence that the insolvency professional has submitted.
  • The above mention due diligence process entails conducting a via public record review & research in India & around the world by utilising cutting-edge research techniques and gaining access to numerous global  databases in English and native language regarding defaults and violations.
  • Effective Section 29A due diligence also requires independent engagement and communication among the various stakeholders in this process.

Appropriate Deep skill sets required in perform due diligence promptly & effectively

  • To conduct due diligence on the Resolution Applicants and their Connected Persons, the Insolvency Professional will need to draw upon the appropriate skill-sets and expertise. The scope of the due diligence exercise may involve hundreds or thousands of connected persons, involving entities or individuals, dispersed across multiple geographies and jurisdictions.
  • Proper Scale of technical skills must be made to make sure that the due diligence is completed by the timeframes.
  • Depending on how difficult the due diligence exercise is, the insolvency professional may decide to hire a different independent advisor to support with this kind of due diligence.

Evaluation of skills in process of Identification of connected persons

  • A list of connected parties must be included in the affidavit that each Resolution Applicant must provide. One may identify entities and people as they begin the due diligence process who were not identified by the Resolution Applicants as connected persons.
  • In these situations, it is essential to quickly determine whether these entities should be regarded as connected persons and, consequently, whether to include or exclude them from the due diligence process.

Proper Identifying & Reporting red flags

  • Under the limitations of the amount of information in the public domain, conduct efficient public domain research, including media, regulatory, litigation, bankruptcy, debt default, and other relevant checks across jurisdictions in English and native language.
  • Identify, investigate, and report any Section 29A-related red flags. Ascertain whether these red flags would make a Resolution Applicant disqualified under Section 29A.
  • The insolvency expert will have to provide the CoC a thorough due diligence report based on the procedures completed.

Rajput Jain and Associates Service offering – Section 29A  Due Diligence

RJA has full of expertise in conducting due diligence of on Companies & businesses in India. RJA has a team dedicated to providing custom due diligence services, together along with practical experience with the Insolvency and Bankruptcy resolution process & knowledge of the regulations for IBC Section 29A compliance.


  • RJA provide the Independent due diligence services, with no audit conflicts.

RJA Experience

  • We undertake incisive public record diligence utilizing our experience across industries and borders to deliver comprehensive solutions for compliance with Section 29A of the IBC 2016.
  • Cross-jurisdictional litigation, regulatory, media, bankruptcy, and credit default checks.
  • Access to international, proprietary databases that can find international, multilingual blogs.

Rajput Jain and Associates Difference

  • one of the most reliable Firm providing due diligence services. we supervised & managed  one of the largest Section 29A compliance reviews in India,  we conducted a substantial number of expertise working on due diligence tasks in India.

Disclaimer: The content of this post isn't considered to be professional or legal advice, We aren't responsible for any damages arising from your access to the location content & must not be relied on or used as a substitute for legal advice from a lawyer professional in your jurisdiction. CARajput is among India's big digital compliance services platform which committed to helping people have started & developed their businesses. We had started with the goal of creating it easier for start-ups to start out their business. Our main aim is to assist the businessman with applicable laws & regulations compliance and providing support at each & every level to make sure the business stays compliant and growing continuously. For any query, help or feedback you may in touch on singh@carajput.com or Call or what’s-up on 9-555-555-480

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