According to the IBC code 2016, the entire matter of insolvency is to be handled by insolvency professional. An insolvency professional is a chartered accountant, who has been established in his field. However, before we begin the matter of appointing this professional, let us look into a discernible definition:
An insolvency professional is a licensed individual who is authorized to act in relation to an insolvent company, individual or a partnership firm.
Insolvency professional and insolvency resolution process
The insolvency resolution process is geared towards making sure that the operational/functional creditors are properly paid back their debts that the Corporate Debtor owes them. Furthermore, it is also geared towards making sure that that credit market is maintained. This resolution process is to be maintained by the insolvency professional. The Insolvency and Bankruptcy board of India is responsible for appointing this professional. How do they choose these professionals? Well, these professionals have to adhere to some pro determined eligibility criteria.
Insolvency professional: the Eligibility Criteria
- For one, it is necessary for an insolvency professional to be above the age of 18
- The professional should be a professional from India.
- There should be no conventions against the professional in the court of law. To be precise,
- The professional should not have committed any offense that exceeds more than 6 months of prison
- The professional should not have committed an offense of moral turpitude
- The professional cannot apply to be an IP for 5 years after expiry of a sentence.
- The IP should not themselves be an undischarged insolvent.
- An IP should be fit of character and a sound mind. The criteria to declare an IP fit are the following:
- There should be no conventions against the IP
- There should be integrity, reputation and character
- The aspirant for should be competent when it comes to financial insolvency and networth.
Qualification and experienced required for insolvency professional
- A professional with experience in management of 15 years and who has qualified the National Insolvency Examination.
- Passing limited insolvency examination with 10 years of experience as the following grants eligibility as well:
- A chartered Accountant
- A company Secretary
- A Cost Accountant
- An Advocate
The above are the qualification and experience criteria to become insolvency professional. However, if an insolvency professional is to be hired only for a limited time, then a chartered accountant, cost accountant of a company secretary with an experience of over 15 years can become an insolvency professional. That said, in this case, the insolvency professional registration would be valid for a limited time and these aforementioned professionals cannot engage with insolvency after the expiry of registration.
The Resolution professional eligibility criteria
For a resolution professional, the IBB has put forward the following regulations:
- The Resolution professional should be independent of the corporate debtor
- The resolution professional should adhere to a particular code of conduct put forward in IBB regulation 2016. Furthermore, the resolution professionals has to make disclosure regarding the code of conduct
- If any resolution professional is partnered up with anyone who is a stakeholder in the insolvency resolution process, then the IP shall not continue as a resolution professional.