Insolvency and Bankruptcy Board of India
7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001
CIRCULAR
No. IBBI/CIRP/023/2019
14th August, 2019
To
All Registered Insolvency Professionals
All Recognised Insolvency Professional Entities, and
All Registered Insolvency Professional Agencies
(By mail to registered email addresses and on website of the IBBI).
Dear Madam / Sir,
Subject: Filing of Forms for the purpose of monitoring corporate insolvency resolution
processes and performance of insolvency professionals under the Insolvency and
Bankruptcy Code, 2016 and the regulations made thereunder.
The objective of the Insolvency and Bankruptcy Code, 2016 (Code) is time bound
reorganisation and insolvency resolution of firms for maximisation of value of assets of the
firm in distress to promote entrepreneurship and availability of credit and balance the interests
of all its stakeholders. The first order objective of the Code is resolution. The second order
objective is maximisation of value of assets of the firm and the third order objective is
promoting entrepreneurship, availability of credit and balancing the interests of stakeholders.
This order of objectives is sacrosanct (Judgement dated 14th November, 2018 of the NCLAT in
the matter of Binani Industries Limited Vs. Bank of Baroda & Anr.). The Code bifurcates and
separates the interests of the firm from that of its promoters / management with primary focus
to ensure revival and continuation of the firm by protecting it from its own management and
from a death by liquidation (Judgement dated 25th January, 2019 of the Supreme Court of India
in the matter of Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors.).
2. The Code is a paradigm shift in the law. Entrenched managements are no longer allowed to
continue in management if they cannot pay their debts (Judgement dated 31st August, 2017 of
the Supreme Court in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr.).
The Code prevails over every other law in case of any inconsistency between the two
(Judgement dated 9th August, 2019 of the Supreme Court in the matter of Pioneer Urban Land
and Infrastructure Limited and Anr. Vs. Union of India & Ors.). The Code is the mandate of
the nation (Order dated 10th April, 2017 of the NCLT in the matter of DF Deutsche Forfait AG
and Anr. Vs. Uttam Galva Steel Ltd.).
3. The Code provides a complete mechanism for its implementation. It assigns specific
responsibilities to an insolvency professional (IP) for its implementation and realisation of its
objectives. An IP plays an important role in resolution, liquidation and bankruptcy processes
of companies, LLPs, partnership firms, proprietorship firms and individuals. He exercises the
powers of the Board of Directors of the corporate debtor (CD) undergoing corporate insolvency
resolution process (CIRP) and complies with applicable laws on its behalf. Section 20 of the
Code requires him to make every endeavour to protect and preserve the value of the property
of the CD and manage its operations as a going concern. Section 23 requires him to conduct
the entire CIRP and manage the operations of the CD. A whole array of statutory and legal
duties and powers is vested in him. He is the fulcrum of an insolvency proceeding and the link
between the Adjudicating Authority (AA) and the stakeholders.
4. The Code facilitates and empowers the IP to discharge his responsibilities effectively. It
obliges every officer of the CD to report to him. It also obliges the promoter of the CD to extend
all assistance and cooperation to him. There is an assurance of supply of essential goods and
services to, and a moratorium on proceedings against, the CD. The Code empowers the IP to
appoint professionals to assist him. He can seek orders from the AA if he comes across any
preferential, undervalued, extortionate, or fraudulent transaction. In order to ensure that an IP
performs his role, the Code empowers the Insolvency and Bankruptcy Board of India (IBBI)
and the Insolvency Professional Agency (IPA) to monitor his performance. It provides for
appropriate sanctions for any kind of wrongdoing. Though a client proposes the name of an IP
for appointment, he is appointed by the AA. He may be removed from a process by the AA if
it is not satisfied with his performance. The appointment and removal by the AA secure and
sanctify the position of the IP. He has protection of actions taken in good faith under the Code
and the Regulations made thereunder. His conduct can only be inspected / investigated by the
IBBI / IPA which has to follow due process for the purpose. There is a bar under the Code on
trial of offences against an IP except on a complaint filed by the IBBI / Central Government,
before the special court.
5. Keeping in view the responsibilities of the IPs, the Code provides for monitoring of their
performances. It casts a duty on the IBBI and the IPA to monitor performance of IPs, and
collect, maintain and disseminate information and records relating to insolvency and
bankruptcy processes. It requires the IBBI to perform the following functions, among others, -
(a) monitor the performance of IPs and pass any direction as may be required for compliance
of the provisions of the Code and the regulations issued thereunder [section 196(1)(g)];
(b) call for any information and records from the IPs [section 196(1)(h)];
(c) collect and maintain records relating to insolvency and bankruptcy cases and disseminate
information relating to such cases [section 196(1)(k)];
(d) maintain websites and such other universally accessible repositories of electronic
information [section 196(1)(n)];
(e) issue necessary guidelines to the IPs [section 196(1)(p)]; and
(f) conduct periodic study, research and audit of the functioning and performance of the IPs
[section 196(1)(r)].
6. The Code casts obligations on IPs to forward/submit the following information and records
relating to CIRP to the IBBI:
(a) all records relating to the conduct of the CIRP and the resolution plan [section 31(3)(b)];
and
(b) a copy of the records of every proceeding before the AA [section 208(2)(d)].
7. In order to facilitate submission of records and information by IPs to the IBBI as well as for
monitoring of the processes and performance of IPs, a set of Forms were devised in
consultation with stakeholders and the IPAs, in pursuance of the mandate and in
synchronisation with the provisions in the Code. These Forms were put out in public domain
on 27th April, 2018 and the comments received have been considered. These Forms have since
been finalised in consultation with the IPAs. An overview of these Forms, as annexed to this
Circular, is as per the Table below:
Table
Form
No.
Period Covered and Scope
To be
Filed by
Timeline
(1)
(2)
(3)
(4)
IP 1
Pre-Assignment: This includes consent to accept
assignment of an IP as IRP / RP / Liquidator / Bankruptcy
Trustee, the details of IP and the Applicant, the details of the
person which will undergo the process, terms of consent,
terms of engagement, filing of application before AA and
withdrawal before admission, etc.
IP
Within
three
days
of
the
relevant date.
CIRP 1 From Commencement of CIRP till Issue of Public
Announcement: This includes details of IRP, CD, and the
Applicant, admission of application by AA, public
announcement,
details
of
suggested
Authorised
Representatives, non-compliances with the provisions of
the Code and other laws applicable to the CD, etc.
IRP
Within
seven
days of making
Public
Announcement
under
section
13.
CIRP 2 From Public Announcement till replacement of IRP:
This includes details of Authorised Representative selected
by IRPs for a class of creditors, taking over management
of the CD, receipt and verification of claims, constitution
of Committee of Creditors (CoC), first meeting of CoC,
confirmation / replacement of IRP, applications seeking
co-operation of management (if any), expenses incurred on
or by IRP, relationship of IRP with the CD, financial
creditors and Professionals, support services sought from
IPE, non-compliances with the provisions of the Code and
other laws applicable to the CD, etc.
IRP
Within
seven
days
of
replacement of
IRP.
CIRP 3 From Appointment of RP till issue of Information
Memorandum (IM) to Members of CoC: This includes
details of RP, details of registered valuers, handing over of
records of CD by IRP to RP, taking over management of
the CD, applications seeking co-operation of management
(if any), details in IM, non-compliances with the
provisions of the Code and other laws applicable to the CD,
etc.
RP
Within
seven
days of issue of
IM to members
of CoC.
CIRP 4 From Issue of IM till issue of Request for Resolution
Plans (RFRP): This includes expression of interest,
request for resolution plans (RFRP) and modification
thereof, evaluation matrix, non-compliances with the
provisions of the Code and other laws applicable to the CD,
if any, etc.
RP
Within
seven
days
of
the
issue of RFRP.
CIRP 5 From Issue of RFRP till completion of CIRP: This
includes updated list of claimants, updated CoC, details of
the resolution applicants, details of resolution plans
received, details of approval or rejection of resolution
RP
Within
seven
days
of
the
approval
or
rejection of the
