Insolvency professional fees must be billed and received personally; LLP routing arrangements breach independence and conduct norms.

An insolvency professional appointed as IRP or RP must act in an individual capacity under the Insolvency and Bankruptcy Code, 2016, and the professional fee and out-of-pocket expenses must be invoiced and received by that professional alone. A separate LLP cannot substitute the professional, cannot enrol as an insolvency professional, and cannot receive fees on the professional's behalf. The Code prevails over any inconsistent LLP arrangement, and such conduct also breaches the standards of integrity, independence, transparency, and the prohibition on undue influence under the code of conduct. The fee-routing arrangement was therefore held impermissible, and a monetary penalty was imposed.

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Issues: Whether an insolvency professional appointed as IRP/RP can authorise a firm in which he is a partner to raise invoices and receive his professional fee and out-of-pocket expenses.

Analysis: The order holds that an insolvency professional acts in his individual capacity under the Insolvency and Bankruptcy Code, 2016 and not as a partner of a limited liability partnership. Fees payable to a resolution professional form part of insolvency resolution process costs and are required to be raised and received by the professional himself. A separate LLP cannot substitute the professional's role, cannot enrol as an insolvency professional, and cannot receive the professional fee on his behalf. The Code prevails over any inconsistent arrangement under the LLP framework, and the conduct also offends the standards of integrity, independence, transparency and prohibition against undue influence under the code of conduct.

Conclusion: The arrangement authorising Ernst & Young LLP to raise invoices and receive the IRP/RP fee was held impermissible. The noticee was found to have violated the Code, the CIRP Regulations, and the code of conduct, and a monetary penalty was imposed.

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