INTRODUCTION

The Insolvency and Bankruptcy Code, 2016 is the bankruptcy law of India which seeks to consolidate the existing framework by implementing a single law for insolvency and Bankruptcy.

The Insolvency & Bankruptcy Code, 2016 has brought in ample opportunities for professionals such as Company Secretaries, Chartered Accountants, Cost Accountants and Advocates. The IBC 2016 is a brave step forward for insolvency resolution in India, has a great potential to succeed.

The professions will witness an incredible growth in the upcoming years under the lights of their expanded role under the regime of the Code.

OBJECTIVES OF IBC, 2016

The Insolvency and Bankruptcy Code, 2016 (“Code”) was introduced with the primary objective of increasing the lender’s confidence and facilitating expansion of the credit market in India. It reduces the time taken to resolve insolvency and also addresses the NPA situation decisively.

IBC, 2016 is a code on Insolvency, Liquidation, and Bankruptcy of the Corporate Person (Company & LLP), Individual’s and Partnership firm for the purpose

• To promote entrepreneurship, ease of doing business.
• In ensuring maximizing wealth of the Corporate Debtor, Individual’s and the Firm to all stakeholders.
• In changing the priority of Government dues at last, after the workmen and employee’s dues.

IBC, 2016 ensures each creditor that whether the financial or operating has to say in the management of the Company and their interest is being protected.

INITIATE CORPORATE INSOLVENCY PROCESS:

The corporate insolvency process may be initiated against any defaulting corporate debtor by

INSOLVENCY PROCESS:

TIME BOUND INSOLVENCY PROCESS

BECOME INSOLVENCY RESOLUTION PROFESSIONAL

Insolvency Professional Examination	The Board shall conduct a “National Insolvency Examination” & Limited Insolvency Examination.
Eligibility	Any Person resident of India who; Has passed National Insolvency Examination Has passed the Limited Insolvency Examination, and has 15 years of experience in management, after graduationfrom university established or recolonized by LAW Has passed the Limited Insolvency Examination, and has 10 years of experience as member of ICAI, ICSI, ICAI(cost) and Bar Council
Application for registration	An Individual enrolled with an insolvency professional agency may make application to IPA with an application fee

As on 8^th Dec, 2017 as per the records available in the IBBI portal, Total 51 IPE are registered with IBBI and 1266 Insolvency Professionals are registered with IBBI.

CS AS RESOLUTION PROFESSIONAL

Company Secretaries are contributing in incorporation activities until the winding up of the corporate company. They also maintain and discharge its Duties and Responsibilities effectively and efficiently to ensure the Corporate Governance.

KEY ROLES

• To take over the management of the corporate borrowers and operate its business as a going concern
• Thrust code is to allow a shift of control from the defaulting debtor’s management to its creditors, in taking custody of assets and monitor the assets.
• Obtain Valuation of Entity, Preparation of (IM) Information memorandum and conduct entire corporate insolvency Resolution Process & manage operations of corporate debtor
• To collect all the information, documents and records pertaining to the assets, finances and operations of the corporate debtor for determining its financial position.
• To receive and collation all claims submitted by creditors and Constitution of the committee of creditors & Conduct of the first meeting of the committee of creditors, reporting periodically to the Board.
• CS professional services can take care over the restructuring & turnaround services such as rapid diagnostic for Red Flags, cash flow forecasting and monitoring, manage stakeholders, guide for sell non-core assets/part of operations, Execute & develop the turnaround plan(Resolution Plan)

VARIOUS CATEGORIES OF PROFESSIONALS AND THEIR ROLE

Sec.	Category	Role
20	Interim resolution professional	To make every endeavor to protect and preserve the value of property of corporate debtor and manage the operations as going concern.
206	Insolvency professionals	To take action as stipulated u/s. 208 where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated in respect of corporate liquidation, individual bankruptcy and other matters.
149	Bankruptcy trustee	To investigate affairs of the bankrupt, realize and distribute the estate of bankrupt.
34, 35	Liquidator	He verifies claims of all creditors, takes into his custody or control all assets, property, effects and actionable claims of corporate debtors, evaluates the assets, ensures continuity of business for beneficial liquidation.
22, 23, 5(27)	Resolution professional	It means an insolvency professional appointed to conduct corporate insolvency resolution process and includes an interim resolution professional.
209	Information utilities	They provide core services and make available information in universally accessible format. They also accept electronic submission and get the information received from various persons authenticated by concerned parties. They also publish such statistical information.

Way Forward- Overcome the Challenges

The Challenges faced by Resolution Professionals with promoters, management and employees.

• The requisite information from erstwhile managements can become a herculean task. There was no information provided by the corporate debtor. The interim professional could not even take custody of the assets. 
• There is a regime where control is moving from Promoter’s hands and that’s the paradigm shift. Convincing promoters that they are no longer in control has been the toughest part.
• The unwelcoming behavior towards resolution professionals isn’t limited to the management; it’s trickling down to employees too. 

Dealing with operational and financial creditors is proving to be a challenge too.

• The resolution professionals are having to settle inter-creditor disputes as well. The law says certain actions can’t be taken without the approval of the Committee of Creditors but some creditors expect all actions should be brought to their notice and require their approval which is not practical.

Dealing with time consuming and tedious Process challenge

• The lack of understanding the insolvency code poses its own set of issues.
• Lack of adequate and credible data regarding the assets, indebtedness and security situation of companies further accentuates the problems.
• The Challenge to complete with prescribed timelines under the insolvency code.
• Insolvency professionals are rushing to buy insurance to protect themselves as they kick off the resolution process under the Insolvency and Bankruptcy Code (IBC). An indemnity cover is meant for professionals to cover liability falling on them as a result of errors and omissions committed by them whilst rendering professional services. 

The challenges faced by IPs are manifold — some awaiting legal clarity, some stemming from tight timelines, some pertaining to practical issues of managing multiple stakeholders, some due to unskilled bandwidth and some due to the sheer complexity of responsibilities IPs are entrusted with.

While the legal issues are expected to be ironed out over a period of time as the insolvency landscape matures, the other practical issues highlighted above can only be handled by a concerted team effort, where each stakeholder works in unison in the interest of collective resolution instead of serving individual interests. The law looks near perfect on papers, but implementation challenges are abound and it may take a few years in delivering the desired results.

Conclusion

Positive involvement, participation of the key stakeholders (borrower and the lender) and motivating themselves in contributing to the effective and intended functioning of the Code would be a critical factor for the success.

The approach and mindset adopted by banks would continue to play a significant role in the success of this initiative, as the tight resolution timelines envisaged under IBC cannot be met if bankers do not have the commercial flexibility and the autonomy to sell distressed assets.

However, fastidiousness initiatives by the Government is the way forward in increasing the interest of Insolvency Professionals and active participation by the lenders will pave the way for a healthy insolvency market very soon.

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