Sending a strong signal, insolvency regulator IBBI’s Disciplinary Committee (DC) has suspended the registration of an insolvency resolution professional (IRP) Bhavna Sanjay Ruia for one year for charging an exorbitant fee.
This move came after the Committee concluded that Ruia, who is enrolled as a professional member of ICSI Institute of Insolvency Professionals, had engaged in acts that “brought disrepute to the noble profession of IP and severely compromised her status as fit and proper person”.
The DC sincerely expects Ruia to use this one year to strengthen her competency and ethical standards, said an IBBI order now made public. She has attempted to mislead the stakeholders, the IBBI Board and the DC by a series of misrepresentation of facts, according to the order.
Madhucon Projects case
As an insolvency resolution professional in Madhucon Projects Ltd case, she had in aggregate quoted a total fee of about ₹14 crore (including initial fee of ₹5 crore), apart from other incidental expenses.
This was done when the total outstanding debt amount from the corporate debtor (Madhucon Projects) was only ₹4.16 crore (including interest and retention money).
The Adjudicating Authority noted that the remuneration for Managing Director and CEO and two whole-time directors works out to ₹1.10 crore a year, whereas the proposed IRP had quoted an “exorbitant” amount.
“The Adjudicating Authority is of the considered view that remuneration quoted by the IRP is quite exorbitant and the same needs to be referred to IBBI. Though there are no prescribed set of rules and regulations/guidelines at present with regard to the fee payable to the IRP/RP, the Authority is of the considered view that the fee quoted by the professionals should be reasonable, commensurate with the work handled”.
It, therefore, recommended the matter to IBBI to take appropriate action/remedial measure against the proposed IRP including disciplinary action, if any, as deemed fit.
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