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Appointment of a Resolution Professional during Insolvency

When a company declares insolvency, then among one of the first part of the procedure is the appointment of a Resolution Professional for that Company.

The Committee of Creditors (CoC) appoints for a Resolution Professional. For the same, they have to appoint one in the first meeting within 7 days of the formation of CoC, wherin, a majority of 75 percent voting shares from the Financial Creditors is needed.

The RP shall become responsible of works to carry forward the entire Corporate Insolvency Resolution (CIR) process and manage the operations of the Corporate debtor. From the appointment, only the RP should send notices and conduct all the meetings held further his appointment.

Q: What is the first date, a resolution plan be passed, from the date of appointment of an RP?
A: According to Section 39, the RP shall submit the resolution plan, that is approved by the CoC, atleast 15 days before the last ever date of the expiry of the maximum period. But this does not apply to an ongoing CIR process which has completed its 130th day from its commencement date. About the further extension from the expiry date, it can be extended to 180 days as under Section 12 and may further be extended to 90 more days by way of an application made by the RP.

The invitations for such resolution plans has to be made at least thirty days before the last date of submission of the resolution plans, under Section 36A. The timelines shall not apply to these regulations to an ongoing CIR process.

Only the CoC decides the last date of the submission of the resolution plan and also has the power to extend it as situation demands.

Q: Roles and duties of an RP, pertaining to the report of the valuer.
A: Pertaining to the report of the valuer, the RP has the duty to
  1. represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings

  2. invite prospective lenders, investors, and any other persons to put forward resolution plans

  3. have the authority to do all acts and to execute, in the name and on behalf of the corporate debtor, all deeds, receipts, and other documents, and for that purpose to use, when necessary, the seal of the corporate debtor, if any

  4. maintain an updated list of claims under Section 25.

The Resolution Professionals will also have a responsibility to check on,
  1. shall examine on whether the resolution plan provides for the payment of insolvency resolution process costs in a manner as may be specified by the Board in priority to the repayment of other debts of the Corporate debtor

  2. issuing an invitation, including the evaluation matrix, to the prospective resolution applicants in accordance with clause (h) of (2) of Section 25 to submit the resolution plans atleast 30 days before the actual submission date as prescribed.

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