Resolution Professional (RP)

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:

• Protect and preserve the value of corporate debtor’s property and manage corporate debtor’s operations as a going concern (section 20)
• Take control and custody of any assets over which corporate debtor has ownership rights as per its balance sheet or information utility or depository
• Gather all information pertaining to corporate debtor’s assets, finances and operations for determining its financial position.
• Receive, verify and collate claims received from creditors in response to the public announcement
• Constitute a committee of creditors
• File information collected with information utility

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:

• Take custody and control of all assets including business records
• Represent and act on behalf of corporate debtor with third parties 
• Exercise rights  for the benefit of corporate debtor in all proceedings – judicial, quasi-judicial or arbitration
• Raise interim finance where needed
• Appoint professional as needed
• Maintain updated list of claims
• Convene and attend all meetings of CoC.
• Prepare information memorandum
• Invite prospective resolution applicants
• Present resolution plans at CoC meetings
• File application for the avoidance of transaction where determined so.