The insolvency regulator IBBI has put a cap on the number of corporate insolvency assignments that an insolvency practitioner (IP) can handle at a time as part of their efforts to ensure that mandates are not concentrated in a few hands.
An IP now cannot have more than 10 corporate insolvency assignments at a time and, of those 10, no more than three can be large with admitted claims exceeding 1,000 crore each, Insolvency and Bankruptcy Board of India (IBBI) has now stipulated.
âPreviously, a general principle was specified in the code of conduct that IPs should not have too many missions that compromise their ability to manage so many. it was decided to go further and introduce the cap as a rule, âofficial sources said.
To attract the penalty
Now that the IBBI has made changes to the Insolvency Professionals Regulation (originally published in 2016) to this effect, any failure to comply with this rule will result in a penalty for IPs, they added.
At the end of March 31, there were 3,504 registered IPs, of which 2,532 had authorization to transfer. Almost 90 percent of registered PIs in India are over 40 years old. Of the 3,504 NPs, up to 318 NPs (approximately 9%) are female.
Ruby Singh Ahuja, senior partner, Karanjawala & Co, a law firm, said the latest amendment limits the number of assignments an IP can undertake at any one time. âOne should be aware that quantifying claims is the domain of PR and therefore limiting the number of missions a PR can undertake will indeed increase efficiency and help to have a focused approach to everything. process, âshe added.
Kumar Saurabh Singh, Partner, Khaitan & Co, a law firm, said the latest regulations will more effectively contribute to the overall administration of the debtor company in the event of an insolvency. Otherwise, the risk that PIs will only focus on the sales process and not turnaround during the administration process is very likely, he added.
“Overall this is a step in the right direction and the IBBI will need to continue to monitor this more closely to see if the number of assignments with the PI needs to be streamlined further,” Singh said.
Criteria for enlargement
The IBBI has also enabled those with 10 years of legal experience, after obtaining a Bachelor of Laws degree, to become an insolvency professional. Until now, only lawyers were allowed, but now even those who work with 10 years of legal experience can become PAs, official sources said, adding that an anomaly has now been removed.
Likewise, those with 10 years of management experience, after earning a master’s degree in management, or a two-year full-time graduate degree in management, can become an NP, the IBBI said.
Nishant Singh, Partner, IndusLaw, said this amendment will provide more flexibility for professionals who have experience in multiple industries. “Thus, this amendment will guarantee a maximum value of the debtor company, thus ensuring higher recoveries,” he said.
Harish Kumar, Partner, L&L Partners, a law firm, said: âIn addition to providing the necessary clarifications on the combination of relevant experience of applicants wishing to register as an IP, the government has also broadened the criteria for registration as a PI.