Don’t look for ready-made solutions: IBBI chief to insolvency professionals
New Delhi: Sending out a strong message, Insolvency and Bankruptcy Board of India (IBBI) chairperson M.S. Sahoo on Saturday said insolvency resolution professionals should not look for “ready-made solutions” and desist from overcharging for their services.
Against the backdrop of concerns about the conduct and independence of insolvency professionals in certain instances, he asserted that character plays a more important role in insolvency profession. The professionals are key to insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) that provides for market-determined and time-bound resolution.
“Don’t look for ready-made solutions... (insolvency resolution) requires your full heart,” Sahoo told an insolvency professionals’ conclave. Emphasising that talent and character are the two key pillars for insolvency professionals, he said their role is defined and cannot exceed the mandate.
While mentioning about instances of the professionals charging high amounts for services, Sahoo urged them not to delegate, outsource, overcharge or engage related parties. “Don’t try to take Rs14 crore from a default of Rs2 crore...,” he said, adding that remuneration should be charged in a transparent manner.
“His position is quite unique compared to other professions. It requires highest levels of integrity, reputation and character. Such responsibilities cannot be entrusted to people of doubtful integrity,” Sahoo noted. The professionals should remain competitive and be updated, the IBBI chief said, adding that they should look at using artificial intelligence to bring down the time taken to complete a resolution process.
Noting that the IBBI has a rigorous process before it invokes the jurisdiction of a court, Sahoo said, “We know our insolvency professionals are vulnerable to certain things and they need protection where they are justified.” With regard to regulations, Sahoo said those pertaining to corporate insolvency resolution have been amended many times and several new norms have been made.
“At times, there is criticism that you are amending (regulations) too often. We have no option because we did not have the knowledge when we started...,” he added. IBBI is implementing the IBC, under which resolution process needs to be completed within 270 days.
Speaking at the event, National Company Law Tribunal (NCLT) president M.M. Kumar said that with the IBC, there has been paradigm shift in various areas while speed is the essence of the code. About paradigm shifts, he said that now the management and the assets of the company do not remain with the debtors while there is also segregation between “commercial wisdom and legal wisdom”.
Noted banker Uday Kotak said that assets belonging to the nation, whether private or public, should be nurtured and protected for creation of value for the nation as a whole. Protection and growth of assets that have gone under stress is one of the primary aims of the IBC, he added. “Keep your focus on making sure that whatever you do stands the test of value you think is right without favour...,” he said.
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