The Insolvency and Bankruptcy Board of India (IBBI) instructed IP Monitoring Division to keep his name on a continuous watch list for irresponsible behaviour and to further investigate his case for a stiffer penalty if a future violation of this behaviour is noticed.
The board prima facie found that IP had violated Section 43(1) of the Insolvency Bankruptcy Code (IBC), Regulation 35A and 40A of the CIRP Regulations read with Clauses 13 of the Code of Conduct.
The IP was appointed by the National Company Law Tribunal (NCLAT) under the Corporate Insolvency Resolution (CIRP) as Interim Resolution Professional (IRP) for M/s SLO Industries Limited.
In exercise of its powers under section 218 of the Code read with the IBBI (Inspection and Investigation) Regulations, 2017, the IBBI appointed an Inspecting Authority (IA) to conduct an inspection of work done by the said IP.
The IBBI has issued a show cause notice based on the findings of the inspector and the inspection report. It was found that the IP has not acted according to the regulations under IBBI.
The failure to file the Avoidance Application (AA) is the concern. In accordance with Section 43(1) of the IBC, the RP or liquidator must submit an application to the AA for the avoidance of a preferential transaction if they believe that the CD has provided a preference in such transactions and in the manner specified at a relevant time.
Furthermore, it should be noted that he had not submitted an avoidance application despite the fact that 572 days had passed since the ICD and 302 days had passed since the date the transaction audit report was submitted until the date of the final CoC meeting, at which the decision to liquidate the CD was made.
The IP claimed that the Advocate was provided with the essential information and documentation prior to those petitions being filed. However, due to the second lockdown imposed by the Tamil Nadu government in response to the COVID-19 pandemic, all operations in the state came to a screeching halt. Nevertheless, he maintained constant contact with the aforementioned advocate regarding the filing of the application, which was noted in the CoC minutes.
The IP has established a case that a mistake was made by the delegated person and not by him, the bench of Sudhaker Shukla, Full Time Member IBB, noted. This alone shows that his irresponsible behaviour lacks any business purpose.
Further noted his admission of mistakes and difficulties faced due to disruption of activities have been duly noted. The bench decided to just warn him for his unprofessional behaviour and not to give a harsher penalty.
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