RP is appointed by the adjudicating authority (National Company Law Tribunal, or NCLT in short, in case of insolvency of corporates and Debt Recovery Tribunal in case of individuals and partnership firms). Upon admission of any corporate debtor by NCLT for corporate insolvency resolution process (“CIRP”), RP is required to take over the entire management and operation of the corporate debtor and run the whole CIRP. Powers of the existing board of directors (or the partners in case of LLP) stands suspended and vests in RP so appointed.
RP is the crucial pillar upon whom rests the insolvency and bankruptcy resolution process under IBC. RP is the critical facilitator for transition from ‘debtor in possession to creditor in control’, the hallmark of IBC – the fundamental change brought about in handling insolvency and bankruptcy resolution process under IBC.
IRP is required to be nominated by the financial creditor under section 7 or by the corporate debtor itself where it chooses to go itself for CIRP under section 10 of IBC. Such nominated insolvency professional takes over as IRP upon admission of application by NCLT unless he/she happens to have any disciplinary proceedings pending against him/her. In that case, NCLT appoints IRP recommended by IBBI. In case of operational creditor under section 9 of IBC, he/she may choose not to nominate an IP. If so, NCLT appoints one recommended by IBBI.
Resolution Professional is appointed by NCLT at the recommendation of the Committee of Creditors (“CoC”) constituted by IRP. IRP may continue as resolution professional if so approved by the CoC.
Section 18 of IBC lays down the duties of an IRP while section 20 lays down his/her powers. IRP’s core duties include:
Section 25 lays down the duties of an RP besides preserving and protecting the assets of the corporate debtor and to continue its business operations: