The role of an insolvency professional in the Insolvency & Bankruptcy proceedings is of great significance. An insolvency professional, wrt Sec 3(19) of the Insolvency & Bankruptcy Code (hereinafter referred as the IBC, 2016) is a person who is a member of an insolvency professional agency under Sec 206 and is registered as an insolvency professional with the Board under Sec 207 of the Code. A ‘liquidator’ is an insolvency professional appointed under Chapter III or V of the Code, wrt Sec 3(18) of the Code.

There are five parts in the Code. And a ‘Resolution Professional’ under Chapter I, Part II has been defined as an insolvency professional to conduct the CIRP (Corporate Insolvency Resolution Process), including an interim resolution professional. Sec 79 (9), Chapter I, Part III of the Code, defines ‘bankruptcy trustee’ as an insolvency professional under Sec 125 of the Code appointed as a trustee for the bankrupt’s estate and Sec 79(21) defines ‘resolution professional’ for this part as an insolvency professional appointed for conducting fresh start process or IRP (Insolvency Resolution Process). Thus, all the professionals envisage from ‘Insolvency Professional’.

A person can function as an Insolvency Professional only on attaining a Certificate of Registration from the Board as per Sec 199, Chapter III, Part IV of the Code, which can be suspended or cancelled on the grounds mentioned under Sec 201(5).

The standards for functioning of an insolvency professional are governed by the Board (Insolvency & Bankruptcy Board of India) as per Sec 196(1)(d), Chapter II, Part IV of the Code.

The main obligations & functions of an insolvency professional (IP) have been described under Sec 208, Chapter IV, Part IV of the Code. On initiation of any insolvency resolution, fresh start, liquidation or bankruptcy process, the IP’s role is to take whatever steps are necessary in the following areas, as per Sec 208(1)-

(a) a fresh start order process under Chapter II of Part III;

(b) individual insolvency resolution process under Chapter III of Part III;

(c) corporate insolvency resolution process under Chapter II of Part II;

(d) individual bankruptcy process under Chapter IV of Part III; and

(e) liquidation of a corporate debtor firm under Chapter III of Part II.

Furthermore, there’s a Code of Conduct that the IP has to abide by as per Sec 208(2), i.e., –

(a) Use reasonable care and diligence in the performance of duties.

(b) Comply with all the requirements and conditions set out in the bye-laws of the IPA (Insolvency Professional Agency) of which he is a member.

(c) Allow the IPA to inspect his records.

(d) Send a copy of the record of proceedings to the IPA and to the Adjudicating Authority to the Board as well.

(e) Perform the functions as prescribed & subject to conditions as specified.

In case an IP deliberately violates the provisions of Part III, then he shall undergo an imprisonment of upto six months, or with a fine ranging from one lakh rupees to five lakh rupees, or with both as per Sec 185, Chapter VI, Part III of the Code.

Author: Kritika, Third Year Law Student, Army Institute of Law, Mohali