“All the assignments in which delegation of authority has taken place by the insolvency professional even if it is with the approval from the Committee of Creditors, the same has to be given a hard relook after this circular,” said Mamta Binani, former president of the Institute of Company Secretaries of India, and an insolvency professional herself.
The IBBI late on Wednesday came with a circular prohibiting outsourcing which many professionals say is confusing.
“It is hereby directed that an insolvency resolution professional shall not outsource any of his duties and responsibilities under the Code,” IBBI said in a circular on Wednesday. “He shall not require any certificate from another person certifying the eligibility of a resolution applicant.”
A blunt interpretation of the circular would mean that individuals who are working as Insolvency Resolution Professionals would have to put up their own infrastructure which would bloat their cost structure.
The new norms put the onus more on individuals as insolvency professionals rather than institutions. This could also force many IRPs to breach the 270 days deadline for resolution.
By law, an insolvency professional can take advisory services from consultants like E&Y, PWC, Grant Thornton, KPMG. For example, X can be appointed as a resolution professional for ABC company. But, a consultant can be his professional advisor.
A source in the government said the drafted language was weak leading to confusion among insolvency professionals. “A clarification may be required on that. IPs taking help from large consultant may come under scanner after some time as IBC attains some maturity,” said the person who did not want to be identified.
“Some insolvency professionals have turned apprehensive with the latest circular barring outsourcing of jobs by resolution professionals. This needs to be clarified,” said Sumant Batra, a Delhi-based insolvency expert.