Preservation of records
Regulation 7(2) (g) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 provides that the registration to be granted to an Insolvency professional, shall be subject to the conditions that the insolvency professional shall maintain records of all assignments undertaken by him under the Insolvency and Bankruptcy Code for at least three years from the completion of such assignment.
Regulation 39A was inserted vide Notification No. IBBI/2018-19/GN/REG032, dated 05.10.2018, in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The newly inserted Regulation 39A provides that the interim resolution professional or the resolution professional, as the case may be, shall preserve a physical as well as an electronic copy of the records relating to corporate insolvency resolution process of the corporate debtor as per the record retention schedule as may be communicated by the Insolvency and Bankruptcy Board of India in consultation with Insolvency Professional Agencies.
Records to be preserved
The following are the records that are to be preserved by an insolvency professional relating to the corporate insolvency resolution process-
- Appointment as Interim Resolution Professional or Resolution Professional, including the terms of appointment;
- Handing over / taking over by him;
- Admission of Corporate Debtor into Corporate Insolvency Resolution Process;
- Public announcement;
- The constitution of Committee of Creditors and Committee of Creditors meetings;
- claims, verification of claims, and list of creditors;
- Engagement of professionals, registered valuers, and insolvency professional entity, including work done, reports etc., submitted by them;
- Information Memorandum;
- All filings with the Adjudicating Authority, Appellate Authority (National Company Law Appellate Tribunal) and their orders;
- Invitation, consideration and approval of resolution plan;
- Statutory filings with Insolvency and Bankruptcy Board of India and Insolvency Professional Agency;
- Correspondence during the Corporate Insolvency Resolution Process;
- Insolvency resolution process cost pertaining to Corporate Insolvency Resolution Process;
- Avoidance transactions or fraudulent trading; and
- Any other records, which is required to give a complete account of the Corporate Insolvency Resolution Process.
Furnishing of records
Clause 19 of the Code of Conduct appended to the First Schedule to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 mandates an insolvency professional must provide all information and records as may be required by the Insolvency and Bankruptcy Board of India or the insolvency professional agency with which he is enrolled.
Clause (a) of sub-regulation (4) of regulation 3 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 provides that the Insolvency and Bankruptcy Board of India may, for the purposes of this regulation, by an order, direct an Inspecting Authority to conduct an inspection of records of a service provider for purposes specified under sub-regulation (4) as below-
- to ensure that the records are being maintained by a service provider in the manner required under the relevant regulations;
- to ascertain whether adequate internal control systems, procedures and safeguards have been established and are being followed by a service provider to fulfill its obligations under the relevant regulations;
- to ascertain whether any circumstance exists which would render a service provider unfit or ineligible;
- to ascertain whether the provisions of the Insolvency and Bankruptcy Code, or the rules, regulations and guidelines made there under and the directions issued by the Insolvency and Bankruptcy Board of India, if any, are being complied with;
- to inquire into the complaints received from clients or any other person on any matter having a bearing on the activities of a service provider; and
- such other purpose as may be deemed fit by the Insolvency and Bankruptcy Board of India in furtherance of the objectives of the Code.
The Investigating Authority may require the insolvency professional to submit records as may be required, before the commencement of investigation. The insolvency professional is bound to submit such records in his custody or control before such Authority.
Recent directions by Insolvency and Bankruptcy Board of India
In exercise of the powers under clauses (aa) and (g) of sub-section (1) of section 196 of the Code read with regulation 39A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution process for corporate persons) Regulations, 2016 the Insolvency and Bankruptcy Board of India issued a circular vide no. IBBI/CIRP/37/2021, dated 4th January, 2021, in consultation with insolvency professional agencies and insolvency professionals.
Vide the said circular the Insolvency and Bankruptcy Board of India directed-
- An insolvency professional shall preserve copies of records generated in electronic form for a minimum period of eight years, from the date of completion of the corporate insolvency resolution process or the conclusion of any proceeding relating to corporate insolvency resolution process before the Adjudicating Authority, Appellate Authority or Court, or any matter pending with the Insolvency and Bankruptcy Board of India, whichever is later.
- For records other than the above, the insolvency professional shall maintain copies for minimum period of three years in physical form, and for minimum period of eight years in electronic form, from the date of completion of the corporate insolvency resolution process or the conclusion of any proceeding relating to corporate insolvency resolution process, before the Adjudicating Authority, Appellate Authority or Court, or any matter pending with the Insolvency and Bankruptcy Board of India, whichever is later.
- An insolvency professional shall preserve the records at a secure place and ensure that unauthorized persons do not have access to the same. For example, he may store copies of records in electronic form with an Information Utility. Notwithstanding the place and manner of storage, the Insolvency professional shall be under obligation to produce records as may be required under the Insolvency and Bankruptcy Code and the Regulations made there under.
- An insolvency professional shall preserve records relating to that period of a corporate insolvency resolution process which he has handled, irrespective of the fact that he did not continue the assignment till its conclusion. For example, an insolvency professional served for three months as Resolution Professional before he was replaced by another insolvency professional, who served till conclusion of the corporate insolvency resolution process. The former shall preserve records relating to the first three months, and the latter shall preserve records relating to the balance period of the corporate insolvency resolution process.
