The first order issued by the recently-established Insolvency and Bankruptcy Board of India (IBBI) is expected to influence many firms, including well-known consultancies that are eyeing the huge market for stressed assets and debt resolution.
In its March 2 order, IBBI rejected an application for registration as an Insolvency Professional (IP) by an individual who works with one of the so-called Big Four consultancy firms.
It held that “... an IP must not ‘engage in any employment’, repeat ‘any employment’.
It envisages that a person must not play two roles — profession and employment - simultaneously,” according to the order.
IBBI is not going to grant registration to individuals in such a scenario and so entities that want to be registered will have to form a separate subsidiary with dedicated resources related to insolvency and bankruptcy work.
The law does allow insolvency professional entities or IPEs wherein the majority of partners are registered IPs.”
This segment is going to be extremely large in the future. There is around ?6.6 lakh crore worth of recognised NPAs in the banking sector as of today.
Legal experts say that the first order from IBBI has set a tone on how it is going to interpret the provisions of its regulations and is in line with the views of other regulators.
IBBI: Know More- IBBI seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.
- It has been set up by the code to regulate professionals, information utilities (IUs) and agencies engaged in the resolution of insolvencies of companies.
- It has chairman and 10 members.
- Current chairman is M S Sahoo.
- There four government-nominated members.
