IBBI Amends Regulations Regarding Insolvency Professionals w.e.f. 31st January 2024

Amendments

1. The Clause 22 of First Schedule of IP Regulations deals with occupation, employability and restrictions on Insolvency Professionals.

The IBBI has amended the Clause 22 by inserting Clause 22A thereafter, which reads as under:

“22A. An insolvency professional may resign from the assignment, subject to the recommendation of the committee of creditors in a corporate insolvency resolution process, consultation committee in liquidation process, the debtor or the creditor in the insolvency resolution process of personal guarantor to the corporate debtor, as the case may be, and the approval of the Adjudicating Authority.

Explanation.- The insolvency professional shall continue to discharge his duties, functions and responsibilities till the approval of resignation by the Adjudicating Authority.”

1. The Clause 23B of First Schedule of IP Regulations states that an Insolvency Professional shall not engage or appoint any of his relatives or related parties, for or in connection with any work relating to any of his assignment.

The IBBI has amended Clause 23B by inserting the following Explanation in the same, which reads as under: -

“Explanation.- For the purposes of this clause, the insolvency professional which is an insolvency professional entity may engage or appoint its partners or directors, as the case may be, for or in connection with any work relating to any of its assignment other than work related to valuation and audit of the debtor.”

1. The Clause 23C of First Schedule of IP Regulations bars an Insolvency Professional from providing any service for or in connection with the assignment which is being undertaken by any of his relatives or related parties. The Explanation to Clause 23C states that for the purpose of clauses 23A to 23C, “related party” shall have the same meaning as assigned to it in clause (24A) of section 5, but does not include an insolvency professional entity of which the insolvency professional is a partner or director.

The IBBI has amended the Clause 23C by renumbering the Explanation as Explanation 1, and after Explanation 1 so renumbered, the following Explanation shall be inserted, namely: -

“Explanation 2.- For the purposes of this clause, the insolvency professional which is an insolvency professional entity may provide any service, other than service related to valuation and audit, for or in connection with the assignment which is being undertaken by any of its partners or directors, as the case may be.”

Ref: No.: IBBI/2023-24/GN/REG 110

Click Here to Read/Download Circular