Professionals with 10 years of experience in law, management can also become IPs: IBBI
Insolvency regulator IBBI has capped the number of assignments of corporate insolvency that an Insolvency Professional (IP) can handle at a time as part of its efforts to ensure that mandates don’t get concentrated in a few hands.
“Earlier, there was general principle specified in the Code of Conduct that IPs should not have too many assignments that compromises their ability to handle so many of them.. However, when it was found that people are not following or sticking to the principle, it has been decided to go one step further and introduce the cap as a rule,” said official sources.
To attract penalty
Now that IBBI has brought in changes to the regulation on Insolvency Professionals (initially issued in 2016) to this effect, any non-compliance to this rule will attract penalty on the IPs, they added.
As of March 31-end, there were 3,504 registered IPs, of which, 2,532 had authorisation for assignments. Nearly 90 per cent of the registered IPs in India are over 40 years old. Of the 3,504 IPs, as many as 318 IPs (about 9 per cent) are female.
Ruby Singh Ahuja, Senior Partner, Karanjawala & Co, a law firm, said that the latest amendment limits the number of assignments that an IP can undertake at any point in time. “One has to be mindful of the fact that the quantification of the claims is in the domain of RP, and, therefore, limiting the number of assignments a RP can undertake will indeed increase the efficacy and shall help to have a focused approach for the entire process,” she added.
Kumar Saurabh Singh, Partner, Khaitan & Co, a law firm, said that the latest regulation will help in the overall administration of the corporate debtor in insolvency more efficiently. Otherwise, the risk of IPs only focussing on sale process and not on turnaround during administration process, is very likely, he added.
“Overall, it is a step in the right direction and the IBBI will have to continue to monitor this more closely to see if the number of assignments with the IP needs to be rationalised further,” said Singh.
The IBBI has also now allowed those with 10 years experience in law, after receiving a Bachelor’s degree in law, to become an insolvency professional. Hitherto, only advocates were allowed, but now even those in employment with 10 years experience in the field of law can become IPs, said official sources, adding that an anomaly has now been removed.
Similarly, those with 10 years of experience in management, after receiving a Master’s degree in management, or two-year, full-time post graduate diploma in management, can become an IP, said the IBBI.
Nishant Singh, Partner, IndusLaw, said this amendment will provide increased flexibility to professionals who have experience in multiple sectors. “Thus, this amendment shall ensure maximised value of the corporate debtor, therefore, ensuring higher recoveries,” he said.
Harish Kumar, Partner, L&L Partners, a law firm, said: “Besides issuing necessary clarifications on combination of relevant experience of applicants desiring to get registered as IP, the government has also broadened the criteria for registration as IP.”