An Overview of the Working of Insolvency and Bankruptcy Code, 2016 with reference to Insolvency Professionals

Abstract

Financial resources are a prerequisite for starting any kind of business as they have the potential to make or break any business idea, all alone. Finance invested into a business can be either ownedor borrowed wherein borrowed financial resources generally come from banks, financial institutions, money lenders, family, relatives etc.

Any business idea when converted into a reality, generates incomes and profits, provides employment opportunities, goods and services to the society, revenue to the Government and growth and development for the economy, thus impacting economy as a whole. However, it is not important that all business ideas succeed. The obvious consequence of failure of a business is financial distress and resultant inability to honour debt obligations.

The insolvency and bankruptcy laws aim to help individuals and business entities, unable to honour debt obligations. In India, Insolvency and Bankruptcy Code, 2016 was enacted as a result of dedicated efforts to overhaul the erstwhile regime which consisted of multiple and fragmented legislations, creating numerous fora for recovery claims.

One of the pillars of the Code are the Insolvency Professionals- persons equipped with certain educational qualifications, skills, knowledge, training and experience, who undertake various processes given in the Code. These professionals are often considered the nervous system of the framework. Since theCode’s implementation, the Board has taken numerous initiatives to encourage the enrolment in and development of the profession.

However, in spite of the coveted position given to them under the Code as well as the trust and confidence reposed in them, some professionals end up harassing the stakeholders and exploit their position by indulging in malpractices and professional misconduct for their personal gains.

Equally unfortunate is the fact that some professionals are being subjected to harassment at the hands of the corporate debtors, their employees, shareholders etc. through intimidation, threats, violence, blackmailing and even abduction. Their professional lives have become a matter of concern for their loved-ones.

In such a situation where the Code is still in its early phase, undergoing amendments, the need of providing protection from as well as to, the insolvency professionals is ever important. Because only then the Government could actually achieve what it all aimed to achieve from this Code.

The present paper throws a light on the history and need of insolvency and bankruptcy laws in India and a brief outline of the role and duties of insolvency professionalsunder IBC, 2016. The main focus is on theharassment by and of, the insolvency professionals. The paper puts forth certain recommendations to deal with both sides of the coin.