Role, Functions and Duties of IP, IRP and RP: formula sheet

Key formulas

No practice without both steps

IP = enrolled with an IPA + registered with the Board (Section 206)

Both conditions must be met before anyone renders services as an IP under the Code.

Sequence for an IP

Membership of IPA first, then registration with the Board (Section 207(1))

Registration is within the time, manner and fee specified by regulations.

Categories of IP

Board may specify categories by qualification and experience in finance, law, management, insolvency or other fields (Section 207(2))

The Code does not itself list a single fixed qualification here. The Board specifies it.

IPA needs registration

No IPA business or enrolment of IPs without a certificate of registration from the Board (Section 199)

Applies to the agency, not the professional.

Application for IPA registration

Acknowledge within 7 days; communicate rejection order within 15 days (Section 201)

A rejection order needs a prior opportunity of being heard.

Suspension or cancellation of IPA registration

Grounds: false statement or misrepresentation; non-compliance with regulations or bye-laws; contravention of Act, rules or regulations; other specified grounds (Section 201(5))

Reasonable opportunity of hearing is needed. The order can be passed only by whole-time members of the Board.

Principles for registering IPAs

Section 200: five principles

Professional development and regulation; competent IPs for debtors and creditors; good professional and ethical conduct; protect interests of debtors, creditors and others; promote growth of IPAs for effective resolution.

Governing board of IPA

Board may make regulations on setting up a governing board, minimum independent members and number of IPs on it (Section 203)

Aim: IPAs must take into account the objectives of the Code.

Regulatory fee on resolution plan

0.25% of realisable value to creditors, payable to the Board where realisable value is more than liquidation value (Regulation 31A(1))

Applies to plans approved under section 31 on or after 1 October 2022. Not payable where the plan for a real estate project is from an association or group of allottees.

Regulatory fee on hired professionals

1% of cost booked in CIRP costs for hiring professionals or other services by IRP or RP (Regulation 31A(2))

Payable to the Board in the manner in the IP Regulations.

Section 208(1): scope of functions

Process initiated → IP takes actions necessary in the matter

Covers fresh start, individual resolution, CIRP, pre-pack, individual bankruptcy and liquidation of a corporate debtor firm.

Section 208(1A): pre-pack stage

Name approved under section 54A(2)(e) → IP performs functions and duties before pre-pack initiation

Applies to the proposed resolution professional before the process formally starts.

Section 208(2): code of conduct

(a) care and diligence; (b) IPA bye-laws; (c) IPA inspection of records; (d) copy of records of every Adjudicating Authority proceeding to Board and IPA; (e) functions as specified

Five duties. Remember them as care, bye-laws, inspection, records, specified manner.

Section 35(1): liquidator's powers (specific example)

Verify claims; take custody of assets; evaluate assets; protect assets; carry on business; sell property; investigate undervalued or preferential transactions; and others

Subject to Adjudicating Authority directions. A liquidator may not sell property to a person not eligible to be a resolution applicant.

Section 196(1)(a), (d), (f)

Board registers IPs, specifies standards, inspects and investigates

Shows who regulates the IP whose duties section 208 sets.

Appointment of IRP

Adjudicating Authority appoints IRP on the insolvency commencement date (s.16(1))

Section 7 or 10 application: the proposed professional is appointed. Section 9 application: the one proposed under s.9(4), else a reference to the Board. In each case only if no disciplinary proceedings are pending.

Board's recommendation time

Board recommends a name within 10 days of the reference (s.16(4))

Applies where an operational creditor makes no proposal.

Term of IRP

Continues till the date of appointment of the RP under section 22 (s.16(5))

The old 30-day limit was removed in 2018.

Effect on management

Management vests in IRP; board powers suspended (s.17(1))

Officers report to the IRP, and banks follow the IRP's instructions on accounts.

Duties of IRP

s.18: collect information, collate claims, constitute CoC, monitor assets and run operations, file with information utility if necessary, take custody of assets

Excludes third-party assets held under trust or bailment, and subsidiaries' assets.

First CoC meeting and RP decision

First meeting within 7 days of CoC constitution; vote of not less than 66% of financial creditors' voting share (s.22)

The CoC either continues the IRP as RP or replaces him.

Replacement of IRP

CoC applies to the Adjudicating Authority; name sent to the Board; if the Board does not confirm within 10 days, the IRP continues (s.22(4)-(5))

The written consent of the proposed professional is required.

RP's role (section 23(1))

RP conducts the entire CIRP + manages the debtor's operations during the CIRP period (subject to section 27)

Section 27 is the CoC's power to replace the RP, so section 23 always operates subject to it.

Continuation after CIRP period (proviso to section 23(1))

RP continues to manage operations until the order under section 31(1) (plan approval) or section 34 (liquidator appointed)

Do not say the RP's role ends when the CIRP period expires.

RP takes IRP's powers (section 23(2))

RP exercises powers and performs duties vested in the IRP under the Chapter

This is why the RP's powers are discussed with sections 17 and 20.

Replacement of RP (section 27(2))

CoC vote of 66% of voting shares + written consent of the proposed RP in the specified form

The vote is taken at a CoC meeting.

Replacement procedure (section 27(3) and (4))

CoC forwards name to Adjudicating Authority → Authority forwards it to the Board (IBBI) for confirmation → appointment in the manner of section 16

The CoC proposes. The Board confirms.

Disciplinary proceedings (section 27(5))

If disciplinary proceedings are pending against the proposed professional, the existing RP continues until another professional is appointed

The process never runs without an RP.

IRP management powers (section 17(1))

Management vests in the IRP; board's powers stand suspended; officers report to the IRP; banks act on the IRP's instructions

The RP inherits these through section 23(2).

Going concern authority (section 20(2))

Appoint professionals; enter into, amend or modify contracts; raise interim finance; instruct personnel; take all actions needed to keep the debtor a going concern

Section 20(1): make every endeavour to protect and preserve value and run the debtor as a going concern.

Interim finance proviso (section 20(2)(c))

No security interest on encumbered property without prior consent of the secured creditor, unless property value ≥ 2 × the amount of the debt

The consent is not needed when the value is not less than twice the debt.

Duties of the bankrupt (Section 150(1))

Give information of affairs + attend on trustee when required + give notice of post-commencement events + do other prescribed things

The events to notify, arising after the bankruptcy commencement date, are acquisition of property, devolution of property and increase in income.

Time limit for notice (Section 150(2))

Notice of increase in income, acquisition or devolution of property within 7 days

The seven days run from the increase, acquisition or devolution.

Duties after discharge (Section 150(3))

After discharge under Section 138, duties continue except the Section 150(1)(c) notice duty

Information, attendance and prescribed duties continue. The notice duty for new property and income ends.

Liquidator's core powers (Section 35(1))

Verify claims; take custody of assets; value assets and report; protect assets; carry on business if needed; sell property; investigate undervalued or preferential transactions; distribute proceeds

All subject to directions of the Adjudicating Authority. Sale must be subject to Section 52, and not to a person ineligible to be a resolution applicant.

Consultation (Section 35(2))

Liquidator may consult stakeholders entitled under Section 53; consultation is not binding

Records of consultation must be made available to other stakeholders not consulted, in the manner the Board specifies.

IP assignment cap (Regulation 7B)

Maximum 10 assignments in aggregate; maximum 3 with admitted claims above ₹1,000 crore each

Applies to an IP who is not an insolvency professional entity. Counts IRP, RP and liquidator assignments.

Standard of conduct for RP (individual and firm processes)

Sections 93 and 120: the RP in the individual and firm insolvency processes must perform functions and duties in compliance with the code of conduct under section 208

Same wording in both sections. Quote the phrase "code of conduct provided under section 208". For a CIRP, cite section 208 and the IBBI regulations instead.

Standard of conduct for bankruptcy trustee

Section 143: bankruptcy trustee must comply with the code of conduct under section 208

Do not forget the trustee; the heading covers more than the RP.

Board's powers over IPs

Section 196: register, inspect, investigate, monitor, call for records, pass orders on complaints

The Board also has civil court powers under section 196(3), such as summoning persons and examining them on oath.

IPA's functions

Section 204: grant membership, lay down conduct standards, monitor, suspend or cancel membership, redress grievances

Suspension or cancellation is on the grounds set out in the IPA's bye-laws.

Principles for registering an IPA

Section 200: promote competent IPs, good professional and ethical conduct, protect interests of debtors and creditors

Useful to show the purpose behind conduct rules.

Quick revision

• An IP acts in fresh start, individual insolvency resolution, CIRP, pre-packaged process, individual bankruptcy and liquidation, as listed in section 208(1).
• Section 208(2) sets five code-of-conduct duties for every IP.
• Duty one: take reasonable care and diligence while performing duties.
• Duty two: comply with the bye-laws of the insolvency professional agency you belong to.
• Duty three: allow the agency to inspect your records.
• Duty four: submit a copy of records of every proceeding before the Adjudicating Authority to the Board and to your agency.
• Duty five: perform functions in the manner and subject to conditions specified.
• Section 23(1): the RP conducts the entire CIRP and manages the operations of the corporate debtor.
• The RP continues to manage operations after the process period expires until an order under section 31(1) or section 34 is passed.
• Under section 23(3), the IRP must hand over all information, documents and records to a newly appointed RP.
• Sections 93, 120 and 143 require the RP or bankruptcy trustee to follow the section 208 code of conduct.
• Section 200 principles for registering agencies include promoting competent IPs, ethical conduct and protecting debtors and creditors.

Common mistakes

• Saying registration with the IBBI alone allows a person to act as IP. Fix: Always write both: enrolled with an IPA and registered with the Board (Section 206).
• Reversing the order, registering with the Board first and then joining an IPA. Fix: Section 207(1) says after obtaining membership of an IPA, the IP registers with the Board. Membership comes first.
• Saying section 208 applies only to CIRP. Fix: List all six processes in section 208(1), including fresh start, individual processes, pre-pack and liquidation.
• Writing that the IP must submit records to the Adjudicating Authority. Fix: Section 208(2)(d): the IP submits a copy of records of every proceeding before the Adjudicating Authority to the Board and to his IPA.
• Saying the IRP is appointed for a fixed 30 days. Fix: Write that the term continues till the RP is appointed under section 22.
• Saying the IRP is always chosen by the creditors. Fix: The Adjudicating Authority appoints the IRP. The CoC takes a decision only at the RP stage.
• Saying the RP's term ends when the CIRP period expires. Fix: Quote the proviso to section 23(1): the RP continues to manage the debtor until the order under section 31(1) or section 34.
• Stating the CoC vote for replacement as a simple majority. Fix: Remember section 27(2): a vote of sixty-six per cent of voting shares, plus written consent of the proposed RP.
• Saying the bankrupt must notify the trustee of new property forever, even after discharge. Fix: Section 150(3) keeps the duties but excludes clause (c), the notice of acquisition, devolution or increase in income.
• Writing that notice of new income must be given within 30 days or 'immediately'. Fix: Section 150(2) says within seven days of the increase, acquisition or devolution.

Exam tips

• Write both requirements for an IP, enrolment and registration, in the first line of your answer. Cite Section 206.
• Learn the five principles in Section 200 and the key functions in Section 196(1). Questions often ask you to list or explain them.
• For IPA questions, remember the numbers in Section 201: 7 days for acknowledgement and 15 days for communicating a rejection order.
• Do not quote eligibility figures that the official text does not give. Say the Board specifies them by regulations.
• In case-based questions, end with a clear conclusion after applying the section to the facts.
• Learn the five clauses of section 208(2) in order and write them as numbered points.
• In case questions, tie each fact to a clause letter. Provision, facts, conclusion earns the marks.
• Quote section 208(1A) and section 54A(2)(e) together when a pre-pack is in the facts.