IBC has been the game-changer in the market. It has stirred the big industries and dragged all the top notch defaulters to NCLT for conducting their insolvency process. This has come with a huge relief for the lenders as they are in a position to recover their hefty dues from the borrowers through a time bound process. And also the recovery is guaranteed unlike other legislations which used to take a lot of time to resolve such disputes.
In this article we have discussed about the powers and duties of the Resolution Professional.
What powers and duties the resolution professional (RP) can exercise?
The powers and duties that vests in the RP or the IRP as the case may be during the conduct of insolvency process as per the Regulation, 1st December 2016, as amended by (fourth amendment) 2017 are mentioned below:
- Appointment of registered valuers to determine liquidation value of the corporate debtor in accordance with Regulation 35.
- Transfer of debt due to creditors to any other person during the insolvency process.
- Sale of unemcumbered asset(s) of the corporate debtor, other than in the ordinary course of business, if he is of the opinion that such a sale is necessary for a better realization of value.
- RP to take assistance of local district administration in discharging his duties under this Code or these Regulations.
- The registered valuers to determine fair value and Liquidation value of the assets of the corporate debtor.
- RP to submit an information memorandum to each member of the committee which shall include the verified claims of creditors within 14 days of first meeting.
- RP to invite resolution plans along with evaluation matrix from resolution applicant/s.
- Sale of all or part of the assets of corporate debtor.
- Substantial acquisition of shares of the corporate debtor.
- Modification of any security interest.
- Waiving of any breach of the terms.
- Reduction in the amount payable to the creditors.
- Extension of a maturity date or change in interest rate.
- Amendment of the constitutional documents of the corporate debtor.
- Issuance of securities of the corporate debtor for cash, properties, securities etc.
- Obtaining necessary approvals from the Central and State Governments and other authorities.
- Resolution plan shall identify specific sources of funds that will be used to pay the insolvency costs.
- Resolution plan to contain all details regarding creditors, the management & control of the business of the corporate debtor during its term and adequate means for supervising its implementation.
- Approval of resolution plan by committee.
- RP to submit it to the Adjudicating Authority.
- RP to acquire orders from NCLT and send order copy to Creditors & Corporate Applicant.
- To extend or not to extend resolution process duration.
What actions RP cannot initiate without prior permission of the committee of creditors?
- Raise any interim finance in excess of the proposed amount.
- Change the capital structure of the corporate debtor
- Record any change in the ownership interest of debtor.
- Instruct financial institutions for a debit transaction in excess of amounts.
- Undertake any related party transaction.
- Amend any constitutional documents of the corporate debtor.
- Delegate its authority to any other person.
- Dispose of or permit the disposal of shares of any shareholder.
- Make any change in the management of the corporate debtor or it subsidiary.
- Transfer rights or financial debts or operational debts.
- Make changes in the appointment or terms of contract of such personnel.
- Conduct meetings of creditors to make such changes with 75% of voting
The IBC has clearly outlined the powers and duties of the resolution professional that he can exercise during the insolvency resolution process. He is required to act according to the Code and follow it during the complete duration of 180 days. The RP’s role in conducting the procedure is most important for its successful completion.
Disclaimer – the above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.