IBBI circular lays down roles and responsibilities of IPs for safekeeping of records
Insolvency regulator IBBI has now directed insolvency professionals to preserve copies of records generated in electronic form during a corporate insolvency resolution process (CIRP) for a minimum period of eight years.
For other records, the IP would have to maintain copies for minimum period of three years in physical form. IPs have also now been allowed to store copies of records in electronic form with an information utility. An IP, in the matter of a CIRP, would now be required to preserve the copies of records that would form the basis for as many as 15 items including his appointment; admission of corporate debtor into CIRP; public announcement; the constitution of Committee of Creditors; invitation, consideration and approval of resolution plan; engagement of professionals; statutory filings with IBBI and IPA; correspondence during CIRP and insolvency resolution process cost during a CIRP.
Sushmita Gandhi, Partner, IndusLaw, said the IBBI circular provides clarity on the period of record retention by specifying the start point and end point for retention of records. Additionally, by distinguishing between the mode of retention of electronically generated records and physical records, the Board has averted major logistical challenge for IRPs/RPs.
Aseem Chawla, Managing Partner, ASC Legal, said: “As a good housekeeping measure this directive circular has been issued on retention of records. The period eight years as stated under Companies Act has been uniformly prescribed for maintenance of records along with the enlisted items for documentation. This is a welcome guidance and requires adherence in professional practice activities”
Souvik Ganguly, Founder and Managing Partner, Acuity Law, said it will be good if the IBBI clarifies the requirements of ‘secure place’ (referred in paragraph 4(iii) of the said circular) which if fulfilled will satisfy the compliance of securely storing the said materials / information to prevent any unnecessary litigations if for any reason such information is compromised and such information continues to be confidential.
Abir Lal Dey, Partner, L&L Partners, said the Circular lays down the roles and responsibilities of Insolvency Professionals for safekeeping of records in a detailed manner. This will provide clarity to the Insolvency Professionals to preserve the records of CIRP and other related matters without any ambiguity.