The Insolvency and Bankruptcy Board of India (IBBI) is seeking to inject more efficiency into the corporate insolvency resolution process (CIRP) as it will prepare a panel of insolvency professionals (IPs) in advance and share the same with the adjudicating authority (AA) to avoid administrative delays in their appointment.

The board will also ensure that due consideration is given to the experience gained by IP in handling assignments under the Insolvency and Bankruptcy Code (IBC), per the “Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2023.”

The panel of IPs prepared as per these guidelines will be effective from July 1, 2023 to  December 31, 2023.

Once the panel of IPs is prepared in advance and shared with the adjudicating authority (AA), the time lag for appointment of IPs to act as Interim Resolution Professionals, Liquidators, and Resolution Professionals will be reduced substantially, say industry experts

Sectoral expertise

Another significant move is that IBBI is inviting expression of interest from IPs in a prescribed format such that they are required to fill the sectors (transport, electricity, hotels, wholesale and retail trade, construction, real estate, manufacturing and others) in which they have handled assignments or are handling assignments under the Code.

“Leading banks have experimented successfully with sector-wise capacity building in stressed asset groups. Similarly, now IBBI, with information on assignments held by insolvency professionals sector-wise, can facilitate measures for development of sectoral expertise and capacity building,” said Hari Hara Mishra, CEO, association of ARCs in India.

Ultimately, these professionals step into the shoes of the promoters and are expected to run the company successfully during interim period till resolution is finalized, opined Mishra.

He underscored that IPs sectoral insight and knowledge will contribute positively to preserve the value of a distressed company undergoing CIRP. 

Sector-wise cases

As per the sectoral distribution of CIRPs in terms of admission in the National Company Law Tribunal (NCLT), the manufacturing sector accounted for 39 per cent of all cases admitted, followed by real estate (21 per cent), construction (11 per cent), wholesale & retail trade (10 per cent), electricity and transport (3 per cent each), hotels (2 per cent), among others.

Since IBC came into force in FY17, there have been 678 corporate debt resolutions, with the total realisation by the creditors being ₹2,86,059.73 crore, up to March-end 2023. This is 32 per cent of the admitted claims of₹8,98,906.04 crore, per IBBI data. The average time taken for closure of CIRP was 614 days.

The CIRP cases that were closed by commencement of liquidiation stood at 2,030 as at March-end 2023, with the average time taken for closure being 456 days, according to IBBI data.