Best Practices for Insolvency Resolution Professionals is a compilation of practices prepared to help guide the Insolvency Professional under the Insolvency and Bankruptcy Code, 2016. Best Practices aims to improve and maintain high standards of ethics and professionalism. It’s also designed to help an insolvency professional work more efficiently.

• During the Corporate Insolvency Resolution Process
• Fees and Expenses
• Duties of Insolvency Professional
• Code of Conduct

Introduction

The insolvency profession continues to grow with the development of the law. The best practices in any field are expected to be implemented in order to achieve the successful outcome. We have enlisted the following best practices to be followed by an insolvency professional as defined by the IBC:

1. During the Corporate Insolvency Resolution Process

Following the appointment, an insolvency professional should take control of the corporate debtor’s assets immediately. He/she should plan two separate statutory and non-statutory record listings. He/she will retain records in a soft and hard form for the time stated in the provisions.

The insolvency professional allows creditors and the suspended board of directors to access the CoC reports. He/she ensures that all communication to the shareholders are made in a simple, transparent, and easy to understand manner. Communications can come in the form of notices, reports, notifications, instructions, or clarifications.

Unless required, an insolvency professional should not speak privately with any of the stakeholders. He/she will take care of the conflict of interest while selecting the professional needed to undertake the assignment.

2. Fees and Expenses

An insolvency professional’s duties include the highest level of professional competence. He/she will have to pay the fee or bear other expenses for the goods and services required to carry out the CIRP. IBBI has provided the following directions to resolution professionals to ensure:

• The fee payable to him/her, insolvency professional entity, other professionals, and other expenses incurred by him during the CIRP are reasonable.
• The fee or other expenses incurred by him/her are directly related the CIRP.
• Written records are maintained for any fee or other expense paid or agreed to incur.
• Supporting fee reports and other expenses incurred are kept for at least three years from the conclusion of the CIRP.
• Approval is obtained by the Committee of Creditors (CoC) for the fee or other expenses.
• The fees and other expenses associated with the CIRP are compensated through the banking system.

The out-of-pocket expenses made is counted as part of the expenses of the insolvency procedure. During the procedure, an insolvency practitioner will report the estimated expense and seek permission for it. He/she will also make sure the expenses incurred are fair.

3. Duties of Insolvency Professional

An insolvency professional should take necessary care and caution in carrying out his/her duties as per the Code:

•  Manage corporate debtor’s affairs.
• Collect all information relevant to corporate debtor’s assets, accounts, and operations.
• Collect and compile all claims by the creditors.
• To form the CoC.
• Monitor and take control of the assets of the corporate debtor.
•  Protect and preserve corporate debtor’s assets.
• Appoint accountants, legal and other professionals
• Maintain an updated list of claims.
• Invite prospective resolution applicants.
• Present all resolution plans at the CoC meetings.

4. Code of Conduct

Insolvency professionals must abide by the time limits laid out in the Code. He/she will plan the actions diligently and communicate with all involved stakeholders for timely execution of his responsibilities. An insolvency professional must not indulge in any other employment while handling an insolvency process.