Survey Highlights Time Spent by Insolvency Professionals on Statutory Issues

Insolvency professionals face significant challenges when dealing with statutory authorities and enforcement agencies during the insolvency resolution process, a recent survey revealed. Conducted by the Indian Institute of Insolvency Professionals of ICAI (IIIPI), the survey included around 30 Insolvency Professionals (IPs).

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The survey highlighted that IPs encounter issues such as statutory or penal proceedings against Corporate Debtors (CDs) despite the onset of a moratorium. Additionally, IPs often receive summons or notices for civil and criminal matters related to periods before the commencement of the Corporate Insolvency Resolution Process (CIRP).

Challenges Faced by Insolvency Professionals

During the insolvency resolution process, IPs spend considerable time addressing issues with statutory authorities and enforcement agencies. In some instances, this interaction can consume up to 25% of the timelines under the Insolvency and Bankruptcy Code (IBC) process, according to the survey findings released on Wednesday.

The IBC aims to provide a time-bound and market-linked resolution for stressed assets. However, statutory authorities and enforcement agencies expect timely conclusions of their proceedings or claims against CDs. This expectation creates practical difficulties for IPs, especially for matters predating the CIRP or where past records are unavailable or not handed over to the Resolution Professional (RP).

Practical Difficulties in Responding to Authorities

IIIPI Board's Chairman Ashok Haldia noted that IPs face challenges in responding to statutory authorities for issues that occurred before the CIRP began. He stated, "While statutory authorities and enforcement agencies expect timely conclusion of their proceedings/claims against the CDs, IPs experience the practical difficulties in responding to them, for matter which are prior to commencement of CIRP, or where past records are not available/handed over to RP, or where only promoters/ex-management are accountable."

The survey underscores that these challenges significantly impact the efficiency and timelines of the insolvency resolution process. The need for better coordination between IPs and statutory bodies is evident to streamline processes and reduce delays.

In conclusion, the findings from this survey highlight the pressing need for improved communication and cooperation between insolvency professionals and statutory authorities. Addressing these issues could enhance the effectiveness of the insolvency resolution process under the IBC framework.