TaxTMI 
TaxTMI 
TaxTMI 
Corporate Insolvency Resolution Process
The Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) provides for the initiation of corporate insolvency resolution process (‘CIRP’ for short) against a corporate debtor under Section 7 of the Code by the Financial Creditor(s), under Section 9 of the Code by the Operational Creditor(s) and under Section 10 of the Code by the Corporate debtor itself by filing an application before the National Company Law Tribunal (‘Adjudicating Authority’ for reference) in Form A giving the details of the case along with the required documents and by paying the required fees.
On receipt of the application, if the Adjudicating Authority is satisfied that the application is complete in all respects, the Adjudicating Authority may admit the application or reject the application, after giving a reasonable opportunity of being heard to the applicant. The date of admission of the application is considered as the commencement of the initiation of the corporate insolvency resolution process.
The CIRP shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. If the Adjudicating Authority is satisfied that the subject matter of the case is such that CIRP cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days.
Appointment of Interim Resolution Professional
An Insolvency Professional is the eligible person to act as Interim Resolution Processional (‘IRP’ for short). The IRP will conduct CIRP till the appointment of Resolution Professional. The Insolvency and Bankruptcy Board maintains an empanelment of insolvency professionals who are willing to act as IRP, Resolution Professional, Liquidator etc. This panel is available with the Adjudicating Authority. The Adjudicating Authority, wherever required select one insolvency professional to act as IRP.
The NCLT, New Delhi Innovsource private Limited Versus Getit Grocery Private Limited - 2018 (2) TMI 1164 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI held that Insolvency and Bankruptcy Board of India, vide its letter dated 01.01.2018, has recommended a panel of IPs for appointment as IRPs in compliance with section 16(3)(a) of the Code to cut delay. The list of recommended insolvency professional provides instant solution to the Adjudicating Authority to pick up the name and make appointment. It helps in meeting the timeline given in the Code and helps unnecessary time wasted, first by asking the Insolvency and Bankruptcy Board of India to recommend the name and then appointing such IRP by Adjudicating Authority.
While filing application before the Adjudicating Authority the Financial Creditor is to mention the name of the Interim Resolution Professional. The Adjudicating Authority considers the request of the applicant and if no disciplinary proceeding is pending against the insolvency professional the Board will give approval for his appointment. An employee of a Financial Creditor cannot be appointed as IRP. - State Bank of India Versus M/s. Metenere Ltd. - 2020 (8) TMI 112 - NATIONAL COMPANY LAW APPEALLATE TRIBUNAL, NEW DELHI.
The operational creditor, while filing the application for initiation of CIRP, it is at the option of the applicant to name an insolvency professional to act as IRP or not. If the applicant proposed the said person will be appointed as IRP, if there is no disciplinary proceeding is pending against the said insolvency professional. If no proposal for an IRP is made, the Adjudicating Authority shall appoint an insolvency professional from the empanelment to act as IRP.
Where the application for CIRP is made by a financial creditor or the corporate debtor, as the case may be, the resolution professional, as proposed respectively in the application under section 7 or section 10, shall be appointed as the interim resolution professional, if no disciplinary proceedings are pending against him.
Once the IRP is appointed the Board of the corporate debtor automatically is suspended. The IRP is to take over the affairs of the corporate debtor. The Supreme Court in M/s. Innoventive Industries Ltd. Versus ICICI Bank & Anr. - 2017 (9) TMI 58 - Supreme Court, held that once an insolvency professional is appointed to manage the company, the erstwhile directors who are no longer in management, obviously cannot maintain an appeal on behalf of the corporate debtor.
An insolvency professional must refrain from accepting too many assignments if he is unlikely to be able to devote adequate time to each of his assignment as held in IDBI Bank Ltd. Versus Lanco Infratech Ltd. - 2017 (8) TMI 1600 - NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD
IRP – a Court Officer
The NCLT, Mumbai, in Asset Reconstruction Company (India) Pvt Ltd Versus Shivam Water Treaters Pvt. Ltd. - 2019 (1) TMI 2081 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH, MUMBAI, held that itt was clarified that IRP is acting as a court officer and any hindrance in the work of CIRP will amount to contempt of court.
Tenure of IRP
The role of the IRP is limited in the CIRP. Initially, the tenure of the IRP was fixed for fourteen days from the commencement of CIRP. With effect from 28.12.2019 the tenure of the IRP was changed. The term of the IRP shall continue till the date of appointment of the resolution professional under section 22.
The IRP, during his tenure, may be replaced by Adjudicating Authority if he does not perform well or act in contravention of the provisions of the Act or rules or regulations made there under.