The bankruptcy regulator has firmed up a provisional list of 787 insolvency professionals (IPs) that it will share with the adjudicating authority to choose from to oversee various cases of resolution or liquidation.
The move is aimed at avoiding administrative delays in the appointment of IPs to expedite insolvency resolution and prevent further erosion of stressed asset value, said a senior official.
Separately, the Insolvency and Bankruptcy Board of India (IBBI) has also picked up 31 Insolvency Professional Entities (IPEs)-usually comprising a group of such professionals-that have also registered themselves as IPs to oversee resolution. The lists are provisional and will be updated periodically.
IPs are the backbone of any insolvency ecosystem, as they take on the important roles of resolution professionals or liquidators or bankruptcy trustees.
The latest list comes on top of a similar “common panel” of about 400 IPs and 17 IPEs prepared by the regulator in June in a first of its kind move.
Prior to this move, the regulator was required to recommend the IP’s name only after receiving reference from the National Company Law Tribunal (NCLT) in a corporate insolvency resolution process (CIRP), which was contributing to the delay in resolution and resultant erosion of stressed asset value.
The selected IPs were eligible for appointment between July 1 and December 31 this year. The IBBI had, earlier this year, asked insolvency professionals and such entities who wished to make it to the first list to submit a formal expression of interest.
Those on the list are eligible for appointment as interim resolution professionals (in corporate insolvency resolution process), resolution professionals (in individual insolvency cases), liquidators and bankruptcy trustees under various sections of the Insolvency and Bankruptcy Code (IBC).
Delhi dominates the list
Delhi led the pack of states with 176 IPs on the list, followed by Maharashtra (143), West Bengal (79), Tamil Nadu (63), Telangana (59), Gujarat (52) and Uttar Pradesh (35). Unsurprisingly, the insolvency eco-system in these states is perceived to be more robust than in others.
The list would be submitted with the Debt Recovery Tribunal for handling individual insolvency cases as well.
Costly delay
Analysts have often blamed delay in insolvency resolution for the erosion of stressed asset value and resultant spike in haircut for lenders.
According to the IBBI data, 67% of the insolvency cases, where resolution process was on until September 2023, have exceeded the 270-day time-frame. Resolutions in another 13% of the cases went beyond 180 days but were still under 270 days. Another set of IBBI data showed the 611 bankruptcy cases resolved under the Insolvency and Bankruptcy Code (IBC) until December 2022 took, on an average, 482 days, barring the time excluded by the NCLT.
Creditors recovered a total of Rs 3.16 lakh crore, or 31.85% of their admitted claims from the resolution of 808 cases under the IBC. The data pertains to the period between late 2016, when the IBC was adopted, and September 2023. However, the cumulative proceeds were 86.31% of the fair value of the companies (when the IBC was invoked) and 168.5% of their liquidation value, showed the IBBI data.
