IBBI confines Insolvency Professional to acknowledge new project for disregarding segment 208

  • Corporate Law

In the instant case, the NCLT admitted application under section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) of corporate debtor. 

The Resolution plan was approved by the Committee of Creditors (CoC) which comprised of PNB only and CIRP was completed within 270 days.  

However, the NCLAT set aside that order and application submitted by PNB for withdrawal of application under section 7 of the Insolvency and Bankruptcy Code, 2016 was permitted and corporate debtor was restored to its old position. 

The IBBI had issued show cause notice to Insolvency Professional (IP) 'K' alleging contraventions of section 208(2) (a) and (e), and Regulation 13 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2017 (CIRP Regulations) and Regulation 7(2) (a) and (h) of IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) as IP failed to explain why interest post CIRP begins as revised claim. 

The acceptance of the claim for the post CIRP period was in violation of Regulation 13 of CIRP Regulation and IP had deferred publication of Expression of Interest (EOI) and thus violated section 208.  

As a result, the Disciplinary Committee directed that IP would not take any new assignment/process under Code without taking a pre-registration education course from IPA of which he was a member.