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India needs robust insolvency professionals

Authorities changing the law for emerging needs

Air India Express Flyer SIN 4 Sectors (1)

The chairperson of Insolvency and Bankruptcy Board of India (IBBI), Dr. M. S. Sahoo has called on the Institution of Insolvency Professionals (IPs) to be robust and efficient to inspire the confidence of stakeholders.

Profession of IPs is a key institution of the Insolvency and Bankruptcy regime, Sahoo said at the 2nd IPs Conclave organised by the Insolvency and Bankruptcy Board of India (IBBI) in Mumbai.

IBBI, in association with the three Insolvency Professional Agencies, namely, the Indian Institute of Insolvency Professionals of ICAI, the ICSI Institute of Insolvency Professionals, and the Insolvency Professional Agency of Institute of Cost Accountants of India, organised a Conclave of Insolvency Professionals on 26 May 2018 in Mumbai.

Over 250 Insolvency Professionals (IPs) participated in the Conclave. It was second such Conclave, the first one was organised on 10 February 2018 in New Delhi.

Sahoo, in his address on “Building the Institution of Insolvency Professionals”, emphasized that profession is a key institution of a market economy and the profession of IPs is a key institution of the insolvency and bankruptcy regime.

For him, IPs are intellectual properties of the Insolvency and Bankruptcy regime and it is the endeavour of the IBBI to create, preserve and enhance the intellectual property of the regime.

While appreciating the performance and conduct of IPs in general, he urged the IPs to collectively build and preserve the reputation of the fledgling institution and not allow a few undesirable elements to tarnish its reputation, as it is difficult to mend the reputation once it is lost.

He believed that if the institution conducts well, its role and relevance would increase over time. The reverse can also happen.

Justice M. M. Kumar, President, National Company Law Tribunal, in his address on “Duties of Resolution Professional under the Code & Best Practices” highlighted the paradigm shift in law that segregates commercial aspects of insolvency resolution from judicial aspects and empowers the stakeholders and the adjudicating authority to decide matters within their respective domain expeditiously.

The IPs act as the bridge between the adjudicating authority and the stakeholders and urged the IPs to guide the Committee of Creditors (CoC) in complying with the provisions of the Code, and to bring it up before the adjudicating authority wherever the CoC behaves contrary to the provisions of the Code.

He advised the IPs not to introduce avoidable practices such as invitation of Expression of Interest which adds to cost and time without corresponding gains.

He emphasized that the intent of the law is to resolve the insolvency of a corporate debtor and the liquidation must be the last resort only after efforts to resolve has failed.

He underlined that the assets of the corporate debtor undergoing resolution are assets of the nations and must continue to be used for creating value for the nation.

He cited recent examples of successful resolutions that should motivate the IPs to realise the objectives of the Code.

He urged the IPs to seize the opportunity under the Code to let them be used for the nation.

Rashesh Shah, President, FICCI and Chairman, Edelweiss Group, in his address on ‘Insolvency Professional as Key Facilitator for Value Creation’ dwelled on the insolvency reforms in developed nations and believed that this reform would result in democratisation of credit in India that would fuel its growth further.

He pointed out that in the first five years, the USA had witnessed 500 changes in law.

He appreciated that Indian authorities are changing the law with alacrity to meet the emerging needs.

Shah felt that this reform, along with other ongoing positive measures, would catapult the Indian economy to a US$5 trillion economy by 2025, making it the third largest economy in the World, next only to the USA and China.

This growth will provide a rare opportunity for IPs.

He identified five pillars of an IP: transparency, knowledge, fairness, execution capability, and ability to balance the stakeholders.

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