In a significant move, the Insolvency and Bankruptcy Board of India (IBBI) has amended its regulations to allow professional entities to enroll as Insolvency Professionals.
The Board, while amending the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2022, introduced a new provision stating that “in clause 10, in sub-clause (1), for the words “an individual”, the words “an individual or an insolvency professional entity recognized by the Board under regulation 13 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016” shall be substituted.”
Further, it is provided in the notification issued on Monday that “No insolvency professional entity, recognized by the Board under regulation 13 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, shall be enrolled as a professional member if it is not eligible to be registered as an insolvency professional with the Board.”
The move is significant as insolvency professional entities were, until last month, only allowed to assist the resolution professional hired by lenders to run companies in distress. That changed when IBBI brought out the Insolvency Professionals (Fourth Amendment) Regulations last month because entities can bring certain advantages over individual professionals.
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