The Insolvency Bankruptcy Board of India ( IBBI ) has incorporated new provisions with regards to the resignation of the Insolvency Professionals ( IP ) from an assignment vide notification no. IBBI/2023-24/GN/REG 110 dated 31st January 2024.
According to newly inserted Section 22A, Insolvency Professionals are now permitted to resign from their assignments, but this decision is contingent upon the recommendation of the committee of creditors ( CoC ) in a corporate insolvency resolution process.
Additionally, Section 22A recognizes the unique circumstances of insolvency resolution processes related to personal guarantors to corporate debtors. In such cases, the debtor or the creditor is given the authority to recommend the resignation of the insolvency professional.
Irrespective of the specific circumstances, whether the insolvency professional is engaged in a corporate insolvency resolution process or handling insolvency resolution processes concerning personal guarantors to corporate debtors, obtaining approval from the adjudicating authority is crucial for the resignation.
These regulations may be called the Insolvency and Bankruptcy Board of India ( Insolvency Professionals ) ( Amendment ) Regulations, 2024. . In the Insolvency and Bankruptcy Board of India ( Insolvency Professionals ) Regulations, 2016, in First Schedule :
“22A. An insolvency professional may resign from the assignment, subject to the recommendation of the committee of creditors in a corporate insolvency resolution process, consultation committee in liquidation process, the debtor or the creditor in the insolvency resolution process of personal guarantor to the corporate debtor, as the case may be, and the approval of the Adjudicating Authority.”
Explanation.- The insolvency professional shall continue to discharge his duties, functions and responsibilities till the approval of resignation by the Adjudicating Authority.”
“Explanation.- For the purposes of this clause, the insolvency professional which is an insolvency professional entity may engage or appoint its partners or directors, as the case may be, for or in connection with any work relating to any of its assignment other than work related to valuation and audit of the debtor.”
“Explanation 2.- For the purposes of this clause, the insolvency professional which is an insolvency professional entity may provide any service, other than service related to valuation and audit, for or in connection with the assignment which is being undertaken by any of its partners or directors, as the case may be.”
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