In order to bring fairness to bankruptcy cases, the Insolvency and Bankruptcy Board of India (IBBI) has asked resolution professionals (RPs) to share copies of their reports with both creditors and debtors in an insolvency case. “It has been observed that in certain cases, the RPs have not shared a copy of the report with both debtor and creditor, leading to a lack of equal information access among them,” the IBBI circular said.
As per the IBC rules, the RP has to submit a report with the adjudicating authority after it receives an application from creditor or debtor. The RP evaluates the application and gives recommendations to the authority for approval or rejection of the application.Experts said that the circular enables debtors to get a better understanding of the evaluation matrix followed by the resolution professional in its report, which would help debtors present their case before the NCLT (National Company Law Tribunal) effectively.
With more information available, debtors can also start working on the negotiations or conditions of repayment plan even before the application before the NCLT is filed, which could reduce the overall resolution time.IBBI data show that 67% of the resolutions were pending for over 270 days till September 2023, which is way higher than the time period stipulated in the code — 180 days from the date of admission of the application to initiate such a process.
“Till now, RPs have been mandated to give a report to the applicant who originally invoked the proceedings and only either of the two — creditor or debtor — would be served with the report by the RP and the other party is deprived of the advance recommendations of the report. The circular aligns with the objective of the code to ensure the effective balancing of the interest of all stakeholders,” said Anjali Jain, partner at Insolvency & Banking at Areness.A recent report tabled in the Parliament on Tuesday also raised concerns over the capability of RPs to carry out time-bound resolution of large companies with complex cases.