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RECOMMENDATION OF INSOLVENCY PROFESSIONAL BY THE INSOLVENCY AND BANKRUPTCY BOARD TO THE ADJUDICATING AUTHORITY |
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RECOMMENDATION OF INSOLVENCY PROFESSIONAL BY THE INSOLVENCY AND BANKRUPTCY BOARD TO THE ADJUDICATING AUTHORITY |
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Introduction The insolvency resolution process is mainly undertaken by the insolvency resolution professional. The insolvency resolution professional may act-
in Corporate insolvency resolution process as well as fast track corporate insolvency process. He may also act as an liquidator in the voluntary liquidation process and liquidation process on the order of the Adjudicating Authority. While initiating the corporate insolvency resolution process the applicant itself is to propose the name of the interim resolution professional or resolution profession to the Adjudicating Authority. The Adjudicating Authority shall appoint him if there is no disciplinary proceedings is against him and also he has given consent to act as resolution professional. If the applicant does not propose any person as insolvency professional, then the Adjudicating Authority shall direct the Insolvency and Bankruptcy Board to recommend the name of a person who is in the panel maintained by the Board. On recommendation of the Board, the Adjudicating Authority shall appoint such person as resolution professional. Reference by Adjudicating Authority to the Board Section 16 of the Code provides the procedure for appointment and tenure of interim resolution professional. The Adjudicating Authority shall appoint an interim resolution professional within 14 days from the insolvency commencement date. Where the application for corporate insolvency resolution process is made by an operational creditor and no proposal for an interim resolution professional is made, the Adjudicating Authority shall make a reference to the Board for the recommendation of an insolvency resolution professional who may act as an interim resolution professional. The Board shall, within 10 days of the receipt of a reference from the Adjudicating Authority, recommend the name of an insolvency resolution professional to the Adjudicating Authority against whom no disciplinary proceeding is pending. Guidelines A guideline has been issued enabling the board to select a person and recommend to the Adjudicating Authority for the appointment of the interim resolution professional. The following are the methods involved in selection of a person for this purpose- Identification of Insolvency Professional An insolvency professional may be recommended to act as an Insolvency Resolution Professional, if-
Determination of vicinity The insolvency professional is to be located, as per his address registered with the Board, in one of the vicinities for the regions as detailed below- Vicinity for Metro Region – Chennai, Delhi, Kolkata and Mumbai; Vicinity for Northern Region – Punjab, Himachal Pradesh, Haryana, Chandirgarh and Jammu & Kashmir, Rajasthan, Uttar Pradesh and Uttarakhand; Vicinity for Western Region – Gujarat, Daman & Diu and Dadar & Nagar Haweli, Madhya Pradesh and Chandigarh; Vicinity for Eastern Region – Andaman & Nicobar, Bihar, Jharkhand, Odisha, West Bench, Arunachal Pradesh, Assam, Manipur, Meghalaya, Nagaland, Tripura and Sikkim; Vicinity for Southern Region – Andhra Pradesh, Telengana, Karnataka, Kerala, Lakshadweep, Tamil Nadu (excluding Chennai) and Puducherry. Procedure by Board
Expression of interest The expression of interest is to be given in Form A. The following information is to be furnished in the said form-
If the declarations turns out to be incorrect at any time, he shall attract disciplinary proceeding under the Code. Preparation of list of eligible persons The Board shall prepare a list of eligible insolvency professionals. The name of an insolvency professional will be included in the list only if he-
Selection of insolvency professional The Board shall recommend the name of an insolvency professional (‘IP’ for short) on the basis of the following two criteria-
The insolvency professional who gets the highest score will be recommended by the Board. The Score is calculated by the formula X = W1V + W2F, Where- W1 = 0.5, weight for volume of ongoing assignments the IP has under the code; V = relative volume of ongoing assignments the IP has under the Code; W2 = 0.5 weight for fee quoted by the IP; and F = relative amount of fee quoted by the iP. The IP who has the lowest volume of ongoing assignments will get a score of 100. The IP who has the highest volume of ongoing assignments will be a score of ‘0’. The difference between the highest volume and the lowest volume will be equated to 100 and other IPs will get scores between ‘0’ and ‘100’. The sum of the values of each ongoing assignment is the volume for an IP. An ongoing assignment shall be valued as under-
Fee quoted The IP who quoted the highest fee will get a score of ‘0’. The IP who quotes the lowest fee will get a score of ‘100’. The difference between the lowest fee and the highest fee will be normalized to 100 and other IPs will get scores between ‘0’ and ‘100’ depending on the fee they have quoted. Selection The above process is undertaken by a team of officers of the Board. The IP getting the highest score will be recommended by the Board. If two IPs get the same score of X, the name of the IP will be decided by draw of lottery. The recommendation of an IP will be made with the approval of an executive director of the Board to the Adjudicating Authority.
By: Mr. M. GOVINDARAJAN - October 6, 2017
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