Introduction
The Indian financial landscape witnessed a transformative change with the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) [1]. This legislation introduced a new category of professionals known as Insolvency Professionals (IPs), who play a pivotal role in the corporate insolvency resolution framework. The IBC represents a paradigm shift from the fragmented legal framework that previously existed under multiple statutes including the Sick Industrial Companies (Special Provisions) Act, 1985, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Insolvency Professionals are specialised licensed professionals registered with the Insolvency and Bankruptcy Board of India (IBBI), established under the IBC [2]. These professionals are authorised to manage the insolvency and bankruptcy processes, control the assets of debtors during proceedings, and facilitate the resolution or liquidation of corporate entities. The regulatory framework adopts a “regulated self-regulation” model, creating a two-tier structure with IBBI as the principal regulator and multiple Insolvency Professional Agencies (IPAs) as frontline regulators [3].
Legislative Framework and Regulatory Structure
The Insolvency and Bankruptcy Code, 2016
The IBC was notified on 28 May 2016, following extensive deliberations by the Bankruptcy Legislative Reforms Committee headed by T.K. Viswanathan. The Code establishes a consolidated framework governing insolvency and bankruptcy proceedings for companies, partnership firms, and individuals. The legislation aims to resolve insolvency matters within a stipulated timeframe of 180 days, extendable by 90 days, significantly reducing the earlier resolution time of 4-6 years to approximately 317 days [4].
The primary objectives of the IBC include maximising the value of assets, promoting entrepreneurship, balancing stakeholder interests, and establishing a time-bound resolution mechanism. The Code applies to companies incorporated under the Companies Act, 2013, Limited Liability Partnerships under the LLP Act, 2008, and other bodies incorporated under various laws as specified by the Central Government.
Regulatory Architecture
The IBBI, established on 1 October 2016, serves as the apex regulatory body overseeing insolvency proceedings, professionals, agencies, and information utilities. The Board exercises comprehensive regulatory oversight, including the formulation and enforcement of rules governing corporate liquidation, insolvency resolution, and individual bankruptcy processes.
Under Section 206 of the IBC, no person can render services as an insolvency professional without being enrolled as a member of an insolvency professional agency and registered with the Board [5]. This dual registration requirement ensures comprehensive oversight and professional accountability within the insolvency ecosystem.
Qualification and Registration of Insolvency Professionals
Eligibility Criteria of Insolvency Professionals
The IBBI (Insolvency Professionals) Regulations, 2016, notified on 29 November 2016, establish detailed eligibility criteria for IP registration. Under Regulation 4, individuals must satisfy specific qualification and experience requirements, maintain good character and reputation, and be free from criminal convictions involving moral turpitude [6].
The categories of professionals eligible for registration include Chartered Accountants, Company Secretaries, Cost Accountants, and Advocates with ten years of professional experience. Additionally, individuals with management experience can qualify under specific educational and experiential criteria outlined in Regulation 5.
Registration Process for Insolvency Professionals
The registration process involves multiple stages, beginning with enrollment as a professional member of an Insolvency Professional Agency. Candidates must pass the Limited Insolvency Examination conducted by IBBI, demonstrating competency in insolvency law, corporate restructuring, and professional ethics. Upon successful completion, individuals become eligible for registration as Insolvency Professionals with IBBI.
The regulatory framework mandates adherence to a comprehensive Code of Conduct specified in the First Schedule to the IP Regulations. This includes maintaining professional integrity, avoiding conflicts of interest, and ensuring confidentiality of information obtained during proceedings.
Functions and Responsibilities of Insolvency Professionals
Corporate Insolvency Resolution Process Management
Under Section 23 of the IBC, the Resolution Professional exercises complete control over the Corporate Insolvency Resolution Process (CIRP) and manages the corporate debtor’s affairs throughout the resolution period. The IP’s authority extends beyond the prescribed CIRP timeline until the adjudicating authority passes orders approving the resolution plan or appointing a liquidator.
The Resolution Professional assumes all powers and functions of the Interim Resolution Professional, ensuring continuity in process management. This comprehensive authority enables effective coordination of resolution activities and stakeholder engagement throughout the proceedings.
Asset Management and Custody
Section 18(f) of the IBC empowers Insolvency Professionals to assume possession and custody of the corporate debtor’s assets upon commencement of the resolution process. This critical function ensures asset preservation and prevents dissipation during proceedings. The National Company Law Tribunal (NCLT) Mumbai Bench in Goa Auto Accessories v. Suresh Saluja affirmed that Insolvency Professionals may take custody of corporate debtor assets to facilitate the resolution process.
Asset management responsibilities encompass identifying, securing, and maintaining all tangible and intangible assets of the corporate debtor. The IP must prepare detailed asset inventories, conduct valuations, and implement measures to preserve asset value throughout the resolution period.
Moratorium Enforcement and Legal Proceedings
The adjudicating authority declares a moratorium under Section 14 of the IBC upon admission of insolvency applications, prohibiting fresh litigation and continuation of existing proceedings against the corporate debtor [7]. This provision creates a “calm period” enabling focused resolution efforts without external legal pressures.
However, moratorium enforcement presents practical challenges for Insolvency Professionals. The moratorium is not automatically imposed across all forums, requiring individual notifications to regulatory bodies and courts. This administrative burden increases costs and creates potential for continued litigation despite the statutory bar. The Supreme Court in P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. clarified that Section 14 extends to proceedings under the Negotiable Instruments Act but only concerning corporate debtors, not their directors or officers.
Information Memorandum Preparation
Insolvency Professionals bear responsibility for preparing comprehensive information memoranda to facilitate resolution plan development. Regulation 36(2) of the CIRP Regulations specifies mandatory disclosures including financial position, litigation details, and material issues affecting the corporate debtor.
The information memorandum serves as the foundation for resolution applicants to formulate viable resolution proposals. Section 29 defines this document as containing information necessary for resolution plan preparation, emphasising the IP’s role in ensuring transparent and complete disclosure of material facts.
Committee of Creditors Constitution
The constitution of the Committee of Creditors (CoC) represents another critical function performed by Insolvency Professionals. After gathering and verifying creditor claims, the Interim Resolution Professional establishes the CoC, which subsequently determines whether to pursue resolution or liquidation of the corporate debtor.
Under Section 24(2), the Resolution Professional presides over all CoC meetings, facilitating deliberations and ensuring compliance with statutory requirements. The IP’s role extends to providing technical expertise, coordinating stakeholder communications, and maintaining meeting records in accordance with regulatory provisions.
Resolution Plan Examination and Implementation
Section 30 of the IBC mandates that resolution applicants submit proposals to the Resolution Professional based on information memoranda. The IP must examine each plan to verify compliance with statutory requirements, including priority payment of resolution process costs, adequate provision for operational creditor payments, and fair treatment of dissenting financial creditors.
The Resolution Professional’s examination must ensure that resolution plans provide payments to creditors at least equivalent to amounts receivable in liquidation scenarios under Section 53(1). This comparative analysis requires detailed financial modeling and stakeholder impact assessment to validate plan viability and fairness.
Upon satisfactory examination, the Resolution Professional submits approved plans to the CoC for voting. Plans receiving approval from at least 60% of financial creditors by voting share proceed to the adjudicating authority for final approval. The Supreme Court in Arcelor Mittal India v. Satish Kumar Gupta clarified that the Resolution Professional’s role is administrative rather than adjudicatory, focused on ensuring compliance with Section 30(2) requirements [8].
Statutory Limitations and Judicial Interpretations
Operational Constraints on Insolvency Professionals
Section 28 of the IBC imposes specific limitations on Resolution Professional actions, requiring Committee of Creditors approval for certain transactions during the CIRP. These constraints ensure collective decision-making while maintaining operational efficiency.
The National Company Law Appellate Tribunal (NCLAT) in Dinal Shah v. Bharti Defence Infrastructure Ltd. emphasised that Resolution Professional misconduct must be reported to appropriate authorities, establishing accountability mechanisms within the regulatory framework.
Judicial Clarifications on Insolvency Professionals Role
The Supreme Court in Swiss Ribbon Pvt. Ltd. v. Union of India characterised Insolvency Professionals as facilitators rather than decision-makers in the resolution process [9]. This interpretation limits IP authority to administrative functions while preserving creditor autonomy in commercial decisions.
In Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, the Supreme Court clarified that Insolvency Professionals must ensure resolution plan completeness before presentation to creditors. The Court emphasised the IP’s role as a major actor managing corporate debtor affairs and convening CoC meetings that determine resolution outcomes.
The NCLAT in State Bank of India vs. Ram Dev International Ltd. addressed IP eligibility concerns where proposed professionals had connections with creditor institutions. The Tribunal established that professional service relationships with financial creditors do not automatically disqualify IP appointments unless employment relationships or conflicts of interest exist.
Challenges and Practical Considerations for Insolvency Professionals
Implementation Challenges for Insolvency Professionals
Insolvency Professionals face numerous practical challenges in discharge of their duties. Complex corporate structures, multiple litigation proceedings, and stakeholder coordination difficulties complicate resolution efforts. The absence of automatic moratorium enforcement across jurisdictions requires substantial administrative effort and resources.
Professional liability concerns arise from the comprehensive responsibilities imposed on IPs. The potential for personal liability in case of procedural lapses or stakeholder disputes creates additional pressure on professionals managing high-stakes proceedings.
Stakeholder Management
Effective stakeholder management represents a critical challenge for Insolvency Professionals. Balancing competing creditor interests, maintaining operational continuity, and ensuring regulatory compliance requires sophisticated coordination skills and technical expertise.
The involvement of multiple regulatory authorities, including sectoral regulators, tax authorities, and enforcement agencies, creates additional complexity in proceedings. IPs must navigate diverse regulatory requirements while maintaining focus on resolution objectives.
Regulatory Evolution and Future Prospects
Recent Amendments and Developments
The regulatory framework continues evolving through periodic amendments addressing practical implementation challenges. Recent IBBI regulation modifications focus on streamlining processes, reducing compliance burdens, and enhancing resolution effectiveness.
The introduction of pre-packaged insolvency resolution processes for micro, small, and medium enterprises demonstrates regulatory responsiveness to sectoral needs. These developments expand the scope of IP services while requiring additional technical competencies.
Professional Development Initiatives
IBBI has established the Graduate Insolvency Programme (GIP) to develop professional capabilities and expand the pool of qualified practitioners. This initiative addresses the growing demand for insolvency services while maintaining professional standards.
Continuous professional development requirements ensure that registered IPs remain current with evolving legal and regulatory frameworks. Regular training programmes, technical updates, and peer learning initiatives support professional competency enhancement.
Conclusion
Insolvency Professionals have emerged as crucial facilitators in India’s corporate insolvency resolution framework. Their multifaceted responsibilities encompass process management, asset preservation, stakeholder coordination, and regulatory compliance within tight statutory timelines. The success of the IBC largely depends on the professional competency and ethical conduct of these practitioners.
The regulatory framework establishes comprehensive oversight mechanisms while preserving necessary professional autonomy. Judicial interpretations have clarified the administrative nature of IP functions while emphasising the importance of procedural compliance and stakeholder protection.
As the insolvency ecosystem continues maturing, Insolvency Professionals must adapt to evolving challenges while maintaining focus on resolution objectives. The integration of technology, enhanced stakeholder communication, and streamlined processes will likely characterise future developments in this critical professional domain.
The transformation of India’s insolvency landscape through the IBC represents a significant achievement in legal and economic reform. Insolvency Professionals, as key implementers of this framework, bear responsibility for realising the Code’s objectives of timely resolution, value maximisation, and stakeholder protection. Their continued professional development and regulatory support remain essential for sustaining the momentum of insolvency reform in India.
References
[1] The Insolvency and Bankruptcy Code, 2016.
[2] Insolvency and Bankruptcy Board of India. Available at: https://ibbi.gov.in/en
[3] Vidhi Centre for Legal Policy. (2020). IBBI Regulations on Insolvency Professionals, 2016. Available at: https://vidhilegalpolicy.in/research/ibbi-regulations-on-insolvency-professionals-2016/
[4] Next IAS. (2024). Insolvency and Bankruptcy Code, 2016 (IBC 2016). Available at: https://www.nextias.com/blog/insolvency-and-bankruptcy-code-ibc/
[5] Indian Institute of Insolvency Professionals of ICAI. (2020). Enrolment Procedure & Guideline. Available at: https://www.iiipicai.in/enrolment-procedure-guideline/
[6] Press Information Bureau. (2016). Insolvency and Bankruptcy Board (IBBI) of India notifies (Insolvency Professional) Regulations, 2016. Available at: https://pib.gov.in/newsite/PrintRelease.aspx?relid=154184
[7] IBC Laws. Section 14 of IBC – Moratorium. Available at: https://ibclaw.in/section-14-moratorium-chapter-ii-corporate-insolvency-resolution-processcirp-part-ii-insolvency-resolution-and-liquidation-for-corporate-persons-the-insolvency-and-bankruptcy-code-2016-ibc-sec/
[8] Global Restructuring Review. (2023). Overview of India’s Insolvency and Bankruptcy Code. Available at: https://globalrestructuringreview.com/review/asia-pacific-restructuring-review/2023/article/overview-of-indias-insolvency-and-bankruptcy-code
[9] Clear Tax. (2025). Insolvency Professional – Meaning, Eligibility and Qualification. Available at: https://cleartax.in/s/insolvency-professional
