TMI BlogFee and other Expenses incurred for Corporate Insolvency Resolution ProcessX X X X Extracts X X X X X X X X Extracts X X X X ..... ervices commensurate to his ability, duties and responsibilities. He also needs to pay fee or incur other expenses for various goods and services required for conducting the CIRP and or managing the operations of the corporate debtor as a going concern. 2. The relevant provisions of the Insolvency and Bankruptcy Code, 2016 (Code) and regulations made thereunder having a bearing on fee and other expenses of CIRP are at Annexure A. 3. An IP is obliged under section 208(2)(a) of the Code to take reasonable care and diligence while performing his duties, including incurring expenses. He must, therefore, ensure that not only fee payable to him is reasonable, but also other expenses incurred by him are reasonable. What is reasonable is context specific and it is not amenable to a precise definition. An illustrative list of factors considered in determination of what is reasonable is given in Annexure B. 4. Para 16 of the Code of Conduct for IPs in the Schedule to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 provides that an IP must maintain written contemporaneous records for any decision taken, the reasons f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t approved by CoC, where such approval is required; (c) any fee or other expense incurred before the commencement of CIRP or to be incurred after the completion of the CIRP; (d) any expense incurred by a creditor, claimant, resolution applicant, promoter or member of the Board of Directors of the corporate debtor in relation to the CIRP; (e) any penalty imposed on the corporate debtor for non-compliance with applicable laws during the CIRP; [ Reference : Section 17 (2) (e) of the Code read with circular No. IP/002/2018 dated 3rd January, 2018.] (f) any expense incurred by a member of CoC or a professional engaged by the CoC; (g) any expense incurred on travel and stay of a member of CoC; and (h) any expense incurred by the CoC directly; [ Explanation : Legal opinion is required on a matter. If that matter is relevant for the CIRP, the IP shall obtain it. If the CoC requires a legal opinion in addition to or in lieu of the opinion obtained or being obtained by the IP, the expense of such opinion shall not be included in IRPC.] (i) any expense beyond the amount approved by the CoC, wherever such approval is required; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws of the insolvency professional agency of which he is a member; (c) to allow the insolvency professional agency to inspect his records; (d) to submit a copy of the records of every proceeding before the Adjudicating Authority to the Board as well as to the insolvency professional agency of which he is a member; and (e) to perform his functions in such manner and subject to such conditions as may be specified . . II. The IBBI (Insolvency Professionals) Regulations, 2016 Relevant Paras of the Code of Conduct under the Regulations read as under: 16. An insolvency professional must ensure that he maintains written contemporaneous records for any decision taken, the reasons for taking the decision, and the information and evidence in support of such decision. This shall be maintained so as to sufficiently enable a reasonable person to take a view on the appropriateness of his decisions and actions. 25. An Insolvency Professional must provide services for remuneration which is charged in a transparent manner, is a reasonable reflection of the work necessarily and properly undertaken and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional. 33. (1) The applicant shall fix the expenses to be incurred on or by the interim resolution professional. (2) The Adjudicating Authority shall fix expenses where the applicant has not fixed expenses under sub-regulation (1). (3) The applicant shall bear the expenses which shall be reimbursed by the committee to the extent it ratifies. (4) The amount of expenses ratified by the committee shall be treated as insolvency resolution process costs. Explanation. - For the purposes of this regulation, expenses include the fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional. Resolution professional costs. 34. The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process costs. Explanation. - For the purposes of this regulation, expenses include the fee to be paid to the resolution professional, fee to be paid to insolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered while charging fee (i) An insolvency professional may charge a fixed or variable fee to reasonably remunerate him/her for the work that he/she necessarily and properly undertakes for an appointment under the Code. In determining what is necessary and proper, the insolvency professional should consider if the work is- (a) directly related to the insolvency resolution process, (b) in furtherance of the exercise of the powers and functions under Code, professional standards, and the terms of agreement, and (c) in consonance with his/her duties under the Code and the Regulations thereunder . (ii) An insolvency professional may use one or a combination of bases to charge fee for carrying out different tasks or discharging different duties. The bases of charging fee include: (a) time based charging, (b) prospective fee (up to a cap), (c) fixed fee, (d) percentage based charging, (e) success or contingency fee, only to the extent that it is consistent with the requirements of integrity and independence of insolvency professionals. Illustration: X is appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. [http://www.txcourts.gov/media/1343648/tdrpc-effective-may-1-2018.pdf] Annexure C Cost Sheet for Insolvency Resolution of Corporate Debtor . Form I: Details of Corporate Debtor Undergoing Insolvency Resolution Process ( To be submitted by the IRP within Seven Days of his demitting 1 office as IRP ) Sl . No. Particulars Description 1 Name of the Corporate Debtor 2 CIN of the Corporate Debtor 3 Date of Commencement of CIRP 4 Assets (Rs. cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other Professionals engaged for CIRP, not for Corporate Debtor Fee Payable to Accounting and Finance Professionals Fee Payable to Audit Professionals Fee Payable to Legal Professionals Fee Payable to any other Professionals Other Expenses on / for Professionals (travel, stay, other out-of-pocket expenses related to CIRP) CoC Meetings Meeting Venue Video Conferencing Electronic Voting Any other Expenses related to CoC Other Expenses Expenses on Public Announcement Expenses on CIRP related Filings before Adjudicating Authority and Other Authorities CIRP related Litigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, stay, other out-of-pocket expenses) Other Professionals engaged for CIRP, not for Corporate Debtor Fee Payable to Accounting and Finance Professionals Fee Payable to Audit Professionals Fee Payable to Legal Professionals Fee Payable to any other Professionals Other Expenses on / for Professionals (travel, stay, other out-of-pocket expenses related to CIRP) Data Room Service CoC Meetings Meeting Venue Video Conferencing Electronic Voting Expenses for or by Authorised Representative Any other Expenses related to CoC Examination of Transactions Preferential Transac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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