Insolvency and Bankruptcy - Law and Practice · Introduction to Insolvency and Bankruptcy Code

Insolvency Professional Agencies and Insolvency Professionals under the IBC

Updated 11 October 2026 · Fact-checked

An insolvency professional agency (IPA) is a body registered by the Insolvency and Bankruptcy Board of India (the Board) that enrols insolvency professionals as members and regulates their conduct. An insolvency professional must join an IPA, then register with the Board, and then act in insolvency processes, including as bankruptcy trustee under section 125.

Understand Insolvency Professional Agencies and Insolvency Professionals

Insolvency processes under the IBC are run by licensed people, not by the court or the creditors. These people are insolvency professionals. The Code builds a three-layer system around them: the Board at the top, insolvency professional agencies in the middle, and insolvency professionals at the base.

The Board registers the agencies. Under section 199, no person can carry on business as an insolvency professional agency and enrol insolvency professionals as members without a certificate of registration from the Board. When it registers agencies, section 200 tells the Board to keep five principles in view: professional development and regulation of insolvency professionals; services of competent professionals for debtors, creditors and other specified persons; good professional and ethical conduct; protection of the interests of debtors, creditors and other specified persons; and growth of agencies for effective resolution of insolvency and bankruptcy processes.

An agency is a front-line regulator. Under section 204 it grants membership to persons who meet its bye-laws on payment of the membership fee, lays down standards of professional conduct, monitors members, safeguards members' rights, privileges and interests, suspends or cancels membership on grounds in its bye-laws, redresses grievances of consumers against its members, and publishes information about its functions, members and their performance. Section 203 lets the Board make regulations on the agency's governing board, including the minimum number of independent members and the number of insolvency professionals on it.

A person becomes an insolvency professional in two steps under section 207. First, obtain membership of an agency. Second, register with the Board within the time, in the manner and on payment of the fee specified by regulations. The Board may specify categories of professionals or persons with qualifications and experience in finance, law, management, insolvency or other fields.

Section 208 gives the professional's function: to take necessary actions in fresh start, individual insolvency resolution, corporate insolvency resolution, pre-packaged insolvency resolution, individual bankruptcy and liquidation of a corporate debtor. Section 125 deals with the bankruptcy trustee, who is an insolvency professional confirmed or nominated by the Board and appointed by the Adjudicating Authority in the bankruptcy order.

Key rules to remember

Section 199 - registration bar: No Board certificate of registration = no business as an IPA and no enrolling of insolvency professionals; An agency must hold a certificate of registration issued by the Board.
Section 200 - principles for registering IPAs: Professional development and regulation; competent services; good professional and ethical conduct; protect debtors, creditors and other specified persons; growth of IPAs for effective processes; Five principles, clauses (a) to (e). These guide the Board when registering agencies.
Section 204 - IPA functions: Grant membership; set conduct standards; monitor; safeguard members' interests; suspend or cancel membership; redress grievances; publish information; Seven functions, clauses (a) to (g).
Section 207 - route to becoming an IP: Membership of an IPA → registration with the Board; Registration is within the time, manner and fee specified by regulations.
Section 208(2) - code of conduct (statutory): Reasonable care and diligence; comply with IPA bye-laws; allow IPA to inspect records; submit copy of records of every Adjudicating Authority proceeding to the Board and the IPA; perform functions as specified; Five items, clauses (a) to (e).
Section 125 - timelines for bankruptcy trustee: Adjudicating Authority directs the Board within 7 days of the application; Board confirms or nominates within 10 days; If an IP is proposed, the Board confirms no disciplinary proceedings are pending, then confirms or rejects and nominates another. If none is proposed, the Board nominates. The Adjudicating Authority appoints in the bankruptcy order under section 126.

How to solve Insolvency Professional Agencies and Insolvency Professionals questions

Most questions on this topic are case-based. Use a fixed structure: provision, facts, conclusion.

1Identify the actor: the Board, an agency, an insolvency professional, or the Adjudicating Authority.
2Identify the issue: registration of an agency, membership, registration of a professional, conduct, or trustee appointment.
3State the provision in plain words with its section number, only where it is in your recall: sections 125, 196, 199, 200, 203, 204, 207 and 208.
4Apply it to the facts. Check each condition, such as membership before registration, or whether an IP was proposed in the application.
5For timelines under section 125, mark who acts, within how many days, and from which event.
6Conclude clearly, for example whether the agency may enrol members, or whether the Board must nominate a trustee.
7Add one practical point, such as record submission to the Board and the agency.

Quickest way: Who-does-what chain

When to use it: Use it for short answers and when a case mixes several actors.

Write the chain: Board registers IPA; IPA enrols IP; IP registers with Board; IP acts in processes.
Attach a section to each link: 199/200, 204, 207, 208.
For trustee questions, write: AA directs in 7 days, Board acts in 10 days, AA appoints in bankruptcy order.
Check whether the application proposed an IP. If yes, the Board confirms or rejects. If no, the Board nominates.

Common mistakes in Insolvency Professional Agencies and Insolvency Professionals

Saying the Adjudicating Authority registers insolvency professional agencies.
Students link every appointment to the tribunal.
Fix: Agencies and professionals are registered by the Board. The Adjudicating Authority only appoints the bankruptcy trustee in the bankruptcy order.
Treating agency membership as enough to act as an insolvency professional.
Section 207 has two steps and students remember only one.
Fix: Write both: obtain membership of an agency, then register with the Board.
Mixing up the 7-day and 10-day periods in section 125.
Both periods appear in several sub-sections.
Fix: Remember: the Adjudicating Authority directs within 7 days of the application, and the Board responds within 10 days of the direction.
Listing section 200 principles as functions of the agency.
Sections 200 and 204 both concern agencies.
Fix: Section 200 guides the Board when registering agencies. Section 204 lists what an agency does.
Forgetting the check on disciplinary proceedings when an IP is proposed as trustee.
Students focus on the timeline only.
Fix: State that the Board confirms there are no disciplinary proceedings pending against the proposed professional, then confirms or rejects.

Worked examples

Example 1

A new body, Nidhi Insolvency Forum, begins enrolling professionals as members without approaching the Board. Advise on the legal position and state the principles the Board would consider if it applied for registration.

Show the solution

Provision: section 199 bars any person from carrying on business as an insolvency professional agency and enrolling insolvency professionals as members except under a certificate of registration issued by the Board.
Facts: the forum is enrolling members and has no certificate.
Conclusion on the first part: its activity is not permitted under the Code.
Principles: under section 200 the Board has regard to promoting professional development and regulation of insolvency professionals, competent services for debtors, creditors and other specified persons, good professional and ethical conduct, protection of the interests of debtors, creditors and other specified persons, and growth of agencies for effective resolution processes.

Answer: Nidhi Insolvency Forum cannot enrol insolvency professionals without a Board certificate of registration (section 199). If it applies, the Board will weigh the five principles in section 200.

Example 2

Rohit Mehta files an application for bankruptcy and proposes Anjali Rao, an insolvency professional, as bankruptcy trustee. The Adjudicating Authority receives the application on 1 March. Explain the process for her appointment.

Show the solution

Provision: section 125(1) requires the Adjudicating Authority to direct the Board, within seven days of receiving the application, to confirm that no disciplinary proceedings are pending against the proposed professional.
Timeline: the direction must be given by 8 March.
Board action under section 125(2): within ten days of receiving the direction, in writing, either confirm Anjali Rao or reject her and nominate another trustee.
If confirmed, section 125(5) says the trustee confirmed or nominated is appointed by the Adjudicating Authority in the bankruptcy order under section 126.

Answer: The Adjudicating Authority directs the Board by 8 March. The Board checks for pending disciplinary proceedings and, within ten days of the direction, confirms Anjali Rao or nominates another trustee. The Adjudicating Authority appoints the trustee in the bankruptcy order.

Exam tips

Reproduce the section 200 and section 204 lists in short, numbered form. Examiners reward complete lists.
In case questions, name the authority and the section for each step. Keep the 7-day and 10-day periods exact.
Use the sequence membership then registration whenever a question asks how to become an insolvency professional.
Add the section 208(2) code of conduct points when a question asks about duties of a professional.

Practice questions from Introduction to Insolvency and Bankruptcy Code

Insolvency Professional Agencies and Insolvency Professionals: frequently asked questions

What does section 200 of the IBC say?

It lists principles the Board must keep in mind while registering insolvency professional agencies. They cover professional development and regulation, competent services, ethical conduct, protection of debtors, creditors and other specified persons, and growth of agencies.

How does a person become an insolvency professional?

The person first obtains membership of an insolvency professional agency. Then the person registers with the Board within the time, manner and fee specified by regulations, as section 207 requires.

Who appoints the bankruptcy trustee under section 125?

The Board confirms the proposed professional or nominates one. The Adjudicating Authority then appoints that trustee in the bankruptcy order under section 126.

What are the main functions of an insolvency professional agency?

Under section 204 it grants membership, sets conduct standards, monitors members, safeguards their interests, suspends or cancels membership, redresses grievances against members and publishes information about itself and its members.