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2019 (1) TMI 1044 - Board - Insolvency and BankruptcyInsolvency Professional Entity (IPE) recognition - consequences of non comply with the provisions of regulation 12 - nonrecognition - Held that - One IPE namely Integro Insolvency Professionals Private Limited (formerly known as Integro Insolvency Professionals Services Private Limited) has confirmed its non-compliance vide e-mail dated 30th November 2018. Therefore the Board hereby de-recognises Integro Insolvency Professionals Private Limited (formerly known as Integro Insolvency Professionals Services Private Limited) bearing recognition number IBBI/IPE/0031 in accordance with Regulation 14 of the said Regulations with effect from 1st October 2018 for non-compliances of Regulations 12(1)(a) 12(1)(b) 12(1)(c) and 12(1)(g) of the aforesaid Regulations. Consequently the thirteen IPEs listed in Para 5 6 and 7 are hereby directed to forthwith (a) surrender their original certificates of recognition to the Board; and (b) inform the concerned Registrar of Companies about their de-recognition. Notwithstanding the de-recognition the aforesaid IPEs shall be jointly and severally liable for all acts or omissions if any of its partners or directors as insolvency professionals committed during such partnership or directorship in accordance with sub-regulation (3) of regulation 13 of the Regulations.
Issues: De-recognition of Insolvency Professional Entities under regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016
Analysis: 1. The judgment revolves around the de-recognition of Insolvency Professional Entities (IPEs) by the Insolvency and Bankruptcy Board of India (Board) under regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. The Board granted recognition to IPEs subject to the condition that they must continuously satisfy the requirements under regulation 12 of the Regulations. 2. The Regulations were amended by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2018, setting deadlines for compliance by IPEs recognized as of 1st April, 2018. The amendments required compliance with specific clauses of sub-regulation (1) of regulation 12 by certain dates. The Board issued circulars advising IPEs to ensure compliance, failing which de-recognition could occur as per regulation 14. 3. Subsequently, the Board requested status updates on compliance from IPEs and informed that non-response by a specified date would lead to presumed non-compliance and de-recognition. Ten IPEs sought extensions, which were not granted due to the absence of provisions for relaxation or extension in the Regulations. Consequently, these ten IPEs were de-recognized for non-compliance with regulation 12. 4. Two IPEs did not respond to compliance inquiries, leading to their de-recognition as well. Additionally, one IPE confirmed its non-compliance. The Board de-recognized these IPEs for failing to meet the stipulated requirements under regulation 12, making a total of thirteen IPEs de-recognized. 5. The judgment directed the de-recognized IPEs to surrender their original certificates of recognition to the Board and inform the Registrar of Companies about their de-recognition. Despite de-recognition, the IPEs remain jointly and severally liable for any acts or omissions of their partners or directors as insolvency professionals during their partnership or directorship, as per sub-regulation (3) of regulation 13 of the Regulations.
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