IBBI Simplifies Regulatory Framework For Insolvency Professional Entity
The Insolvency and Bankruptcy Board of India (IBBI) has taken steps to simplify the regulatory framework for Insolvency Professional Entities (IPEs) and to enable effective implementation of processes by Insolvency Professionals (IPs). The IBBI has given clear guidelines on disciplinary proceedings, as well as the limit on the number of assignments and fee structure for an IPE acting as an IP.
An IPE can be a limited liability partnership, a registered partnership firm or a company. Since an IPE acting as an IP will have multiple individuals as its directors or partners, the IBBI has clarified the process for initiating disciplinary action in cases of contraventions.
The regulatory body issued a circular on Thursday regarding the issuance of show cause notice in case of contraventions. As per the circular, the show cause notice can be issued to the director or partner of the Insolvency Professional Entity (IPE) who is an Insolvency Professional (IP) authorised to act on behalf of IPE for the respective task.
Moreover, if there are repeated instances of contraventions against one or more directors or partners, then the show cause notice can be served to the IPE. IBBI clarified that the restrictions on the number of assignments that can be undertaken by an IP will not be applicable to IPEs.
Regarding the fee structure, the regulator stated that IPEs have an expanded role with the introduction of provisions allowing them to act as IPs. Thus, their fee should be market-determined at this juncture.
The Insolvency and Bankruptcy Board of India (IBBI) issued two circulars on Thursday regarding the professional services rendered by Insolvency Professionals (IPs).
The first circular stated that IPs who work for Insolvency Professional Entities (IPEs) are in a better position to negotiate their fees based on their in-house resources and the variety of services they offer.
The second circular clarified that IPs may provide professional services in implementing a resolution plan approved by the Adjudicating Authority, provided the details of the services are mentioned in the approved plan.
Moreover, the circular also emphasised the importance of maintaining compliance while billing or invoicing for services provided by IPs to other professionals. Besides, the circular said the bill or invoice may be raised in the name of the IPE or the professional or the firm in which such professional is a partner.
