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IBBI bars an Insolvency Professional from rendering services for 3 months

KR Srivats New Delhi | Updated on August 26, 2020

This member had contravened IBC by engaging an unregistered valuer

Appointing an unregistered valuer got an insolvency professional (IP) Rajneesh Singhvi in trouble with the insolvency regulator IBBI barring him from taking fresh assignments or rendering services for three months.

Singhvi, who is a professional member of the Indian Institute of Insolvency Professionals of ICAI, had not complied with an IBBI circular that provided that no IP shall appoint a person other than a registered valuer to conduct any valuation under the Insolvency and Bankruptcy Code (IBC) or any its regulations, the Insolvency and Bankruptcy Board of India (IBBI) said in an order.

This order will come into force on expiry of 30 days from the date of issue of the order, which is August 24. Singhvi has, however, been allowed to continue to conduct and complete the assignments/processes he has in hand as on date of the order.

Singhvi had appointed an unregistered valuer Abhishek Ahuja in the Corporate Insolvency Resolution Process (CIRP) of Arjun Ispat India Private Ltd. Ahuja was not a registered valuer as on the date of his engagement for valuation of assets of the corporate debtor. The IBBI’s Disciplinary Committee also noted that Singhvi failed to appoint registered valuer by the 47th day of the insolvency commencement. Under the CIRP regulations, it is the duty of an IP to appoint registered Valuers within 7 days of their appointment and not later than 47th day from insolvency commencement date to determine the fair value and liquidation value of the corporate debtor.

Commenting on this IBBI Disciplinary Committee order, Souvik Ganguly, Founder and Managing Partner, Acuity Law, said the IBBI is making a point that insolvency professionals will be required to follow the applicable rules and regulations in a strict manner. This is so because the insolvency professionals are one of the most important pillars on which the entire insolvency law is built upon. However, the key problem for insolvency professionals is that the Insolvency law does not prescribe the manner in which they can appeal an order of the IBBI, he said. “Most are resorting to filing Writ petitions. This is a time consuming process”, Ganguly said.

Aseem Chawla, Managing Partner, ASC Legal, a law firm, said the order reflects the ongoing endeavours of the Disciplinary Committee to lay down high standards of governance and expects adherence both in letter and spirit of various IBBI pronouncements made from time to time. This is a step in a right direction, he added.

Published on August 26, 2020

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