New Delhi, July 3: The Insolvency and Bankruptcy Board of India (IBBI) has proposed to limit insolvency professional’s number of assignments to a maximum of five that can be handled at a given point of time.
The IBBI said that the restriction on assignment would "put a check on undesirable instances of delay and disturbance to the processes led by IPs while simultaneously handling too many assignments under the code."
"With limits in place, quality of output is expected to improve; this, in turn, will facilitate inter alia realisation of the objective of value maximisation as enshrined in the code," IBBI noted.
An insolvency professional has significant responsibilities during a corporate resolution process under the Insolvency and Bankruptcy Code (IBC). The assignment limits have been proposed on the basis of turnover of a corporate debtor. An IP can take a maximum of five assignments at one time provided a corporate debtor's turnover is less than Rs 1,000 crore.
In a discussion paper that sought public comments, it said the processes under the code require a unique combination of skill sets in terms of subject matter knowledge and management skills for an IP.
Noting that different stages of transactions require skills sets accordingly, it said a spike in one area of expertise would not be sufficient to create a uniform experience for stakeholders.
"Further, it cannot be ignored that no two IPs possess identical sets of qualification, experience, skills and expertise. Similarly, no two CIRPs (Corporate Insolvency Resolution Processes) are same as it involves diverse businesses, complex corporate structures, varied stakeholders," it said.
The code of conduct for IPs mentions that they must refrain from accepting too many assignments, if they are unlikely to be able to devote adequate time to each assignment. However, neither the code nor IBBI has put any restriction on the number of assignments to be handled by an IP at a given point of time.