Also mandates RPs to disclose relationship with corporate debtor, financial creditors and resolution applicants
Insolvency regulator IBBI has mandated that insolvency professionals should henceforth raise bills only in their own names towards their fees. Also, such fees would have to be paid through banking channels, the IBBI has said.
The regulator has also now amended its regulations to
stipulate that the resolution professionals should disclose his/her relationship and the relationship of the professionals engaged by him with the corporate debtor, the financial creditors, resolution applicants etc to the insolvency professional agency of which he/she is a member, in a time-bound manner.
Although this disclosure requirement was already provided in a circular issued in 2018, the IBBI has now brought this norm under its regulations.
Commenting on the IBBI move, Neha Naik, Associate Partner, Phoenix Legal, said that stipulation on raising bills in the own name of resolution professional
will stop the practice of the insolvency professionals raising bills/ invoices in the name of the insolvency professional entities or other persons. This clarity will help track/ calculate actual cost of the insolvency professional’s services.
Further, restrictions on wrongly including the penalties levied on them by the IBBI due to their non-compliance, under the category of insolvency resolution process cost, is a welcome move as the said cost is to be paid by the resolution applicant in priority as the same does not form part of the said cost as per the provisions of the IBC, she said.
Kumar Saurabh Singh, Partner, Khaitan & Co, said the move to stipulate that RPs would need to raise invoices in their own names was indeed welcome and should go a long way in ensuring that Corporate Insolvency Resolution Process are conducted in a fair, transparent and non-arbitrary manner.
Tahira Karanjawala, Principal Associate, Karanjawala & Co. said the IBBI amendments seeks to formalise and make explicit facets which have been implicit in the functioning of insolvency professionals and will go a long way to ensure that the CIRP is conducted in a more professional manner with inbuilt checks to ensure transparency in the process.
Published on July 11, 2022