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IBC | Alert | IBBI’s circular in aid of IPs conducting CIRP

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The Insolvency and Bankruptcy Board of India (“IBBI”) has released a circular dated 29 June 2018 (available here) listing orders passed by different National Company Law Tribunals (“NCLTs”) where the NCLTs have aided insolvency professionals (“IPs”) in discharging their roles and responsibilities under the Insolvency and Bankruptcy Code, 2016 (“Code”), rules and regulations made thereunder. As per the said circular, the IPs are requested to go through the orders passed by NCLTs for better and complete understanding and update themselves from subsequent orders on the same subject.

  • The IBBI has listed following factors for issuing the circular:
    • An IP plays a key role in corporate insolvency resolution process (“CIRP”) under the Code.
    • A whole array of statutory and legal duties and powers is vested in him.
    • Section 20 of the Code requires him to make every endeavour to protect and preserve the value of the property of the corporate debtor (“CD”) and manage its operations as a going concern.
    • Section 23 requires him to conduct the entire CIRP and manage the operations of the CD.
    • He exercises powers of the Board of Directors of the CD under resolution. He is, in fact, the driving force and the nerve-centre in an insolvency proceeding of a CD.
    • The law facilitates and empowers the IP to discharge his responsibilities effectively.
    • It obliges every officer of the CD to report to him.
    • It also obliges the promoter of the CD to extend all assistance and cooperation to him.
    • There is an assurance of supply of essential goods and services to, and a moratorium on proceedings against, the CD.
    • The Code empowers the IP to appoint professionals to assist him.
    • He can seek orders from the NCLT if he comes across any preferential, undervalued, extortionate, or fraudulent transaction.
    • He can take support services from the insolvency professional entity of which he is a partner / director. He has protection for actions taken in good faith.
    • There is bar on trial of offences against an IP except on a complaint filed by the IBBI.