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NEW DELHI : The Insolvency and Bankruptcy Board of India (IBBI) will set up panels of resolution professionals based on location of their registered office and the volume of their ongoing assignments, a databank that tribunals can use to quickly appoint a professional to take over defaulting companies.
IBBI said a new set of guidelines will come into effect from 1 January 2022 on the appointment of insolvency resolution professionals, liquidators and bankruptcy trustees, on the basis of which it will draw up panels of experts to be hired by tribunals.
Bankruptcy tribunals reach out to IBBI under different circumstances to rope in resolution professionals, but the process of identifying, nominating and appointing a resolution professional takes time. The proposed creation of panel of resolution professionals will have a validity of six months after which a new panel will replace it, IBBI said in the new guidelines issued on Wednesday.
“For example, the first panel under these guidelines will be valid for appointments during January – June 2022, and the next panel will be valid for appointments during July – December 2022, and so on," IBBI said in the regulations.
Usually, when a tribunal asks IBBI to nominate a resolution professional, the regulator does not have information about the volume, nature and complexity of an insolvency or bankruptcy process and the resources available at the disposal of an insolvency professional. In such a situation, IBBI is unlikely to add much value by recommending a professional for the process, IBBI said explaining why the proposed panels will be useful for quick decision making by the tribunal.
The current process of appointment may entail two to three weeks, which could be saved if the tribunal has a ready panel of professionals recommended by IBBI and it can pick up any name from it for appointment, IBBI said.
The regulator’s move is in line with the government’s efforts to quicken the process of bankruptcy resolution, a policy priority. Avoiding delays in the resolution process is key to preserving the value of assets available for restructure and for effective turning around of the corporate debtor.
A Parliamentary standing committee on finance led by BJP leader Jayant Sinha had in August flagged the delays in the bankruptcy resolution process saying that more than 71% of the cases were pending for more than 180 days.
