Insolvency and Bankruptcy

IBBI Circular (No. IBBI/IP/65/2024): Enhancing Efficiency Measures in Insolvency Professional Processes

The Insolvency and Bankruptcy Board of India (IBBI) issued a circular (No. IBBI/IP/65/2024) on 1^st Feb 2024 to address all duly registered Insolvency professionals, recognized insolvency professional entities, and registered insolvency professional agencies. This circular is issued to facilitate clarity and transparency in specific areas for the efficient conduct of insolvency processes by insolvency professionals. (IPs).

The IBBI circular provides clarity on the roles and functionality of Insolvency Professionals (IPs) within the Insolvency and Bankruptcy Code, 2016, and empowers them to appoint professionals and avail services from insolvency professional entities (IPEs). Section 208 of the IBC code, including IP regulations, mandates IPs to comply with the code of conduct, which covers principles such as integrity, independence, impartiality, remuneration, and costs. Depending upon the experiences, the IBBI circular provides clarity on two different specific issues, such as

1.     Rendering Professional Service in Resolution Plan Implementation:

1. The circular provides clarity that an IP may render professional services with the implementation of a resolution plan duly approved by the Adjudicating Authority (AA).
2. The circular also specified that the details of services need to be mentioned in the resolution plan approved by AA.
3. It also addresses the specific instances where the AA give approval for resolution plans with provisions for implementation or monitoring committees, where IPs, due to their familiarity with business, are given roles.

2.     Billing/Invoicing Compliance for Services Availed by IP:

1. The circular facilitates clarity in compliance as per Clause 25C of the IBC code of conduct, which shows the bills or invoices for services must be raised in the name of IPE or the professional engaged by it.
2. Acknowledges market practices where bills or invoices may be raised in the name of the firm where the individual professional appointed by the IP is a partner.
3. It acknowledges the market practices where the bills or invoices should be raised in the name of a firm where the insolvency professional is a partner, which will be considered as adequate compliance.
4. This circular is issued under the powers conferred by section 196 of the IBC code, 2016.

Conclusion

The IBBI, in its circular (No. IBBI/IP/65/2024), facilitates an increase in the clarity and transparency for the functioning of insolvency professionals (IPs) under the IBC code 2016. It reflects the commitment to refine and enhance the entire insolvency process. The circular provided clarity concerning the implementation of resolution plans and billing compliance and made IPs comply with the conduct principles outlined in the IBC code for smooth insolvency proceedings.

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