The Insolvency and Bankruptcy Board of India (IBBI) has proposed to limit the number of corporate insolvency cases a single insolvency professional (IP) is permitted to handle at any given time. Currently, there is no limit on the number of assignments an IP is permitted to take; however the code of conduct requires IPs to not accept assignments if they will not be able to devote adequate time to them.
“… it is proposed to issue necessary guidelines to IPs advising them to limit the maximum number of assignments handled by them to 5,”, the insolvency regulator said in a discussion paper published on Thursday. The proposed limit would be adjusted from five to one based on the turnover of the corporate debtor the IP is appointed to, with IPs allowed to handle up to five assignments for companies with up to Rs 1,000 crore each, and only one assignment if the corporate debtor has a turnover over Rs 50,000 crore.
Experts said the move would likely promote better value preservation of corporate debtors. “… at times, a insolvency professional is seen involved in many assignments and hence, not able to give much time to a corporate debtor,” said Daizy Chawla, senior partner at law firm Singh and Associates.
Abir Lal Dey, partner at law firm L&L partners, said the proposal was in line with the objective of the insolvency law and with observations made at many judicial forums. He also noted that such a move would help curb delays in insolvency proceedings.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines