Introduction

The Insolvency and Bankruptcy Code implemented and enacted in the year 2016 has brought about drastic changes in the insolvency process of India. The Resolution Professional (RP), who is an independent personnel, takes care of the corporate debtor throughout the process of insolvency, and plays a vital part in the entire process of IBC.

The RP is not the representative of either the debtor or the creditors. On the contrary, the RP is a statutory fiduciary and process manager, making sure that the Corporate Insolvency Resolution Process (CIRP) is done according to the IBC law and maintaining its effectiveness.

On the other hand, there are multiple operational challenges, litigation risks, and stakeholder conflicts faced by the RP, even when there exists a well-defined statutory framework around the same.

Legal Framework Governing the Resolution Professional

The Resolution Professional has the following roles that have been primarily identified:

• Sections 16 to 25A of the Insolvency and Bankruptcy Code, 2016
• The Insolvency and Bankruptcy Board of India (IBBI) Regulations
• Legal precedents set by SupremeCourt, National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT)

At the beginning the RP is appointed as IRP under Section 16 of the IBC and then confirmed/replaced by Committee of Creditors (CoC) under Section 22 of the IBC. The RP after appointment takes control of the business affairs of the company debtor as per Section 17 of the IBC, subject to the overall supervision of CoC and the adjudicating authority.

Core Legal Duties of the Resolution Professional

a. Management of Corporate Debtor as a Going Concern

One of the primary statutory obligations of the RP is to ensure that the corporate debtor continues to operate as a going concern during CIRP. This includes:

• Continuation of business operations
• Protection of assets from deterioration
• Ensuring operational continuity
• Maintaining the confidence of the stakeholders

By doing so, the RP effectively replaces the board of directors and assumes full operational control.

b. Verification and Admission of Claims

The RP is responsible for:

• Collecting claims from financial and operational creditors
• Verifying documentation and supporting evidence
• Admitting or rejecting claims based on statutory criteria

This function is critical as it directly determines voting rights in the Committee of Creditors and ultimately influences the outcome of CIRP.

c. Constitution and Management of Committee of Creditors (CoC)

Under Section 21, the RP constitutes the CoC comprising financial creditors. The RP ensures:

• Proper classification of creditors
• Accurate determination of voting shares
• Transparent conduct of CoC meetings
• Maintenance of records and minutes

The RP acts as a facilitator of decision-making rather than a decision-maker, while ensuring procedural legality.

d. Invitation and Evaluation of Resolution Plans

The RP plays a central role in the resolution process by:

• Issuing Expression of Interest (EOI) and Request for Resolution Plans (RFRP)
• Compliance ensurance with eligibility criteria under Section 29A of the IBC
• Resolution plans evaluation for conformity with IBC requirements
• Approved plans submission to the CoC for voting

The RP ensures that resolution plans are compliant with statutory, financial, and operational requirements.

e. Reporting to Adjudicating Authority

The RP is required to file periodic reports before the NCLT regarding:

• Progress of CIRP
• Status of claims and assets
• CoC decisions
• Resolution plan approval status

This step adopted by the RP ensures judicial oversight and transparency in the insolvency process.

Judicial Position on the Role of RP

The courts of law in India have all along emphasized on the necessity of maintaining a neutral stance of RP as an administrator rather than a business operator. In the matter of Swiss Ribbons Pvt. Ltd. v. Union of India, the Supreme Court recognized the IBC system and affirmed the position of RP as a facilitator for conducting a CIRP.

In addition, the Courts have reiterated that:

• RP should be impartial
• RP decisions are not subjected to extensive judicial review
• RP needs to comply with the IBC and IBBI rules

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But the Courts have equally highlighted the fact that RP works in a highly litigious and time-sensitive environment.

Practical and Operational Challenges faced by RP

Even after the clear provisions made in the Insolvency and Bankruptcy Code, 2016, the Resolution Professional (RP) has to overcome many difficulties in performing his/her obligations during the process of Corporate Insolvency Resolution Process (CIRP).

Disputes arise at different stages of the process including acceptance of application for CIRP, claims verification, eligibility of the resolution applicant under section 29A, and appeals from CoC's decision, thus placing the RP in the center of disputes and facing the wrath of the judiciary for the alleged biasness on his/her part.

Further, the RP works under considerable pressure of many parties like the financial creditors who are interested in maximizing their money, operational creditors who expect equal treatment, employees who are worried about their employment, and resolution applicants who emphasize on commercial aspects.

Also, the statutory timeframes stipulated by the IBC, mostly in the range of 180-330 days, necessitate due diligence, coordination with stakeholders and compliance with procedures within tight timeframes, and are further complicated in practice with delays caused by litigation and procedures.

Moreover, there are cases when the RPs face difficulties related to the problem of asset and information asymmetry, such as insufficient or inaccurate accounting statements, non-cooperation from suspended management, problems with tracking down and evaluating assets, as well as fragmented and controversial database system, all of which negatively impact the effectiveness of CIRP implementation.

Even though the evaluation is done by registered valuators, the RP should still coordinate the process, answer the objections raised by the Committee of Creditors and resolution applicants, and ensure the defensibility of the valuation report, since valuation disputes are one of the main sources of litigation.

Finally, the Resolution Professionals are exposed to considerable liability risks due to the possibility of scrutiny from the Insolvency and Bankruptcy Board of India, possible judicial review of procedural mistakes, conflicts of interest and bias, and financial risks in rare cases.

Conclusion

The Role of the Resolution Professional holds significant importance in the context of the CIRP scheme under the Insolvency and Bankruptcy Code of 2016. Nonetheless, from the standpoint of practical realities, the Resolution Professional operates in an extremely complicated scenario of litigation, stakeholder contestations, valuation disagreements, and rigid statutory deadlines.

In this context, the effectiveness of CIRP will depend on the efficacy, independence, and professional expertise of the Resolution Professionals. Essentially, the Resolution Professional is not only the administrator of the process but the very core of the insolvency resolution framework in India.

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