IBBI Regulations on Insolvency Professionals, 2016
Regulating Insolvency Professionals for development of the insolvency eco-system in India
The insolvency and bankruptcy processes provided under the Insolvency and Bankruptcy Code, 2016 (Code) is managed by a specialised class of professionals known as ‘insolvency professionals’ or ‘IPs’. The Code adopts a “regulated self-regulation” model for the development and regulation of the insolvency profession in India. A two-tier regulatory structure is created with the Insolvency and Bankruptcy Board of India (IBBI) as the principal regulator and multiple Insolvency Professional Agencies (IPAs) as the frontline regulators. To render services as an IP, an individual is required to enrol with an IPA and also register with the IBBI.
The IBBI notified the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 (IP Regulations) in 2016 for development and regulation of the IP industry. Under the IP Regulations, an individual can register as an IP to render services under the Code. To ensure appropriate standards for the profession, the IBBI conducts a Limited Insolvency Examination, which is a prerequisite for registration. Once registered, the IPs are required to abide by the Code of Conduct specified under the First Schedule to the IP Regulations. The IP Regulations also outline the process for disciplinary proceedings involving IPs. They provide for recognition of ‘Insolvency Professional Entities’ as well.
Ever since its notification, the IP Regulations has proved successful in fulfilling its mandate. In a brief span of three years, India has seen tremendous growth in this profession. More than three thousand individuals have registered as IPs with the IBBI over the years and more than one hundred IPEs have been recognised. There has been a growing acceptability of the services rendered by the insolvency professionals in the Indian market, even outside the services rendered under the Code.