Bankruptcy Board Chief To Insolvency Professionals: Don’t Look For Readymade Solutions

Sending out a strong message, Insolvency and Bankruptcy Board of India Chairman MS Sahoo today said insolvency resolution professionals should not look for “readymade solutions” and desist from overcharging for their services.

Against the backdrop of concerns about the conduct and independence of insolvency professionals in certain instances, he asserted that character plays a more important role in insolvency profession. The professionals are key to insolvency proceedings under the Insolvency and Bankruptcy Code that provides for market-determined and time-bound resolution.

“Don’t look for ready-made solutions... (insolvency resolution) requires your full heart,” Sahoo said at an insolvency professionals’ conclave. Emphasising that talent and character are the two key pillars for insolvency professionals, he said their role is is defined and cannot exceed the mandate.

Mentioning about instances of the professionals charging high amounts for services, Sahoo urged them not to delegate, outsource, overcharge or engage related parties. “Don't try to take Rs 14 crore from a default of Rs 2 crore...,” he said, adding that remuneration should be charged in a transparent manner.

“His position is quite unique compared to other professions. It requires highest levels of integrity, reputation and character. Such responsibilities cannot be entrusted to people of doubtful integrity,” Sahoo noted.

The professionals should remain competitive and be updated, the IBBI chief said, adding that they should look at using artificial intelligence to bring down the time taken to complete a resolution process.

Noting that the IBBI has a rigorous process before it invokes the jurisdiction of a court, Sahoo said, "We know our insolvency professionals are vulnerable to certain things and they need protection where they are justified."

With regard to regulations, Sahoo said those pertaining to corporate insolvency resolution have been amended many times and several new norms have been made.

"At times, there is criticism that you are amending (regulations) too often. We have no option because we did not have the knowledge when we started...," he added.

The Insolvency and Bankruptcy Board of India (IBBI) is implementing the IBC, under which resolution process needs to be completed within 270 days.

Speaking at the event, National Company Law Tribunal President MM Kumar said that with the IBC, there has been paradigm shift in various areas while speed is the essence of the Code. He said now the management and the assets of the company doesn’t remain with the debtors while there is also segregation between "commercial wisdom and legal wisdom".

Noted banker Uday Kotak said that assets belonging to the nation, whether private or public, should be nurtured and protected for creation of value for the nation as a whole. Protection and growth of assets that have gone under stress is one of the primary aims of the IBC, he said.