Industry
For insolvencies, head to the big cities to find a debt resolution expert
Summary
Data shows that insolvency professionals are concentrated in New Delhi, Mumbai, Chennai, and Kolkata, with 1,023 out of 2,093 IPs operating in these cities. This trend reflects the larger corporate ecosystems and demand for expertise in handling distressed assets and insolvency cases.
New Delhi: Professionals with skills in reviving sinking companies prefer to operate from the four metro cities of New Delhi, Mumbai, Chennai and Kolkata, official data from the Insolvency and Bankruptcy Board of India (IBBI) showed. This suggests that the biggest opportunity in distressed markets is concentrated in these hubs.
Of the 2,093 insolvency professionals (IPs) who are authorised to take up debt resolution or liquidation assignments, nearly half (1,023) have registered in these big cities. Delhi leads the pack with 428 authorised IPs, which is more than two-fifth of the count among the four cities. Mumbai has 304 professionals with authorisation for assignment, Kolkata has 170, and Chennai has 121, data from IBBI showed.
According to Yogendra Aldak, partner at Lakshmikumaran & Sridharan Attorneys, these cities also have a dense network of law firms, financial consultants, and other professionals collaborating with IPs on insolvency matters, thus creating a supportive ecosystem and attracting more professionals.
To be sure, IPs who are qualified to practise under the insolvency and bankruptcy code (IBC) need authorisation from their respective self-regulatory bodies recognised by the IBBI for their enrolment to start taking up assignments, an additional regulatory requirement that was introduced in January 2020. Only about half of all the 4,431 registered insolvency professionals have this authorisation for assignment.
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The northern region, including Delhi, has 793 IPs authorised to act as debt resolution or liquidation professionals, followed by 600 in the western region including Mumbai, and 469 in the southern region including Chennai. The eastern region including Kolkata has 231 authorised insolvency professionals.
Large numbers
The number of companies incorporated is also concentrated in large state economies like Maharashtra and Delhi.
According to Adlak, the concentration of insolvency professionals in large cities is not surprising given that they are home to major businesses, industries, multinational companies, and global investors, which leads to more corporate defaults and complex corporate insolvencies.
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“These cities also have the presence of regulatory bodies overseeing insolvency processes and the headquarters of most large corporations, banks, and financial institutions," said Aldak. “Therefore, the demand for skilled IPs in these cities is naturally higher due to the volume of distressed assets, bankruptcies, and financial restructuring cases."
Aldak also said adding more professional capacity is desirable as the implementation of the Insolvency and Bankruptcy Code (IBC) has led to a surge in insolvency cases, exceeding the available capacity of IPs and severely impacting the efficiency of insolvency processes and resolution of distressed companies.
“While the IBBI is actively taking steps to promote the insolvency profession by encouraging more individuals to take the necessary exams and register as IPs, there is still a need for targeted measures like training, certification programs, awareness campaigns, and technology integration to encourage more professionals to enter the field," said Aldak.
While city wise data on IBC cases is not readily available, data available from the ministry of corporate affairs showed nearly half of the over 10,400 companies going through liquidation process under Companies Act—a different process compared to IBC proceedings—are in Maharashtra, Delhi and West Bengal, and the rest are spread across other states.
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