The Insolvency and Bankruptcy Board of India (IBBI) suspended the Registration of an Insolvency Professional (IP), Anand Chandra Swain and noted that treating all resolutions as approved, in absence of confirmation by member of Committee of Creditors (CoC) is against spirit of the Insolvency and Bankruptcy Code, 2016 (IBC).
Section 25(3) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) provides that the IRP shall take a vote of the members of the Committee of Creditors (CoC) present in the meeting, on any item listed for voting after the discussion on the same.
Furthermore, Regulation 25(5)(b) of the CIRP Regulations provides that the IRP shall seek a vote of the members who did not vote at the meeting on the matters listed for voting, by an electronic voting system in accordance with Regulation 26 where the voting shall be kept open for at least twenty-four hours from the circulation of the minutes.
Anand Chandra Swain recorded all the proposed resolutions as ‘approved’. Furthermore, it is his submission to the Board that later on, CoC dissented from the said resolutions vide email and, thereafter the IRP circulated the revised minutes.
Anand Chandra Swain did not file his reply to the show cause notice and in the submission, it was stated that even after the expiry of 48 hours of circulation of the minutes of the 1st CoC meeting to the only member of the CoC, no objection was received from their side until 30 days.
The Insolvency Professional further stated that he was replaced by the CoC without appointing any new Resolution Professional, these facts have been informed to the Adjudicating Authority (AA) in an application filed against the CoC for cooperation and the AA has passed the necessary order to his effect.
A Single Member of the Board comprising Sudhaker Shukla, Whole Time Member, observed that “The conduct of Mr. Swain, treating all resolutions as approved, in the absence of any confirmation by the member of the CoC is against the spirit of the Code. Mr. Swain could not have stepped into the shoes of financial creditors to decide upon the proposed resolutions only because the creditors failed to vote in the said timelines.”
“The Disciplinary Committee (DC), in exercise of the powers conferred under section 220 (2) of the Code read with Regulation 13 of the Inspection Regulations hereby suspends the registration of Mr. Anand Chandra Swain for a period of one year” the Bench noted.
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