You will now get to know how much insolvency resolution professionals (IRPs) charge as ‘fees’ for their crucial role in the corporate insolvency resolution process (CIRP).
The Insolvency and Bankruptcy Board of India (IBBI) has directed IRPs to disclose the fees and other expenses to the insolvency professional agency (IPA) to which they are registered with. It has also stipulated that on receiving disclosures from its IRPs, the IPAs should publish it on an appropriate electronic platform within three working days.
Going by a recent IBBI circular, this disclosure has been stipulated not only for ongoing and subsequent CIRPs, but also for all concluded ones.
Information on IRP fees levied for already concluded CIRPs have to be furnished by July 15, the IBBI has said.
Currently, there are three IPAs registered with IBBI — the Indian Institute of Insolvency Professionals of ICAI, ICSI Institute of Insolvency Professionals, and Insolvency Professional Agency of Institute of Cost Accountants of India.
IRPs have been directed to ensure that the fees payable to them, to the insolvency professional entity and to registered valuers and other professionals, and other expenses incurred by them during the CIRP are “reasonable”. Also, all CIRP-related fees and other expenses are to be paid through the banking channel.
Call for integrity
The IBBI has also directed IRPs to determine the fees on an arm’s length basis, with “integrity and independence”.
Additionally, it has specified the expense heads that cannot form part of the IRPC. These include any expense incurred by a member of the committee of creditors (CoC) or a professional engaged by the CoC, any expense incurred on travel and stay of a member of CoC, and any expense incurred by the CoC directly.
Saurav Kumar, Partner at law firm Induslaw, said the role of IRPs has come under a lot of criticism in the recent past, with their fees and expenses found to be in excess and unreasonable.
“This circular should go a long way to put the house in order and the CIRP process will be efficiently managed,” Kumar added.
Pankaj Mahajan, Head – Restructuring & Insolvency, Mazars, said the circular is more on recommendatory lines because it has directed IRPs to structure their fees in a reasonable way, having regard to the effort and the resources involved in a specific case.