IBBI Suspends Insolvency Professional for One Year Over Negligence and Unjustified Delay in Liquidation Process
Introduction
The Insolvency and Bankruptcy Board of India (IBBI) has suspended an Insolvency Resolution Professional (RP) for one year due to negligence and unjustified delay in conducting the liquidation process of Ila Metals.
Factual Background
The Corporate Insolvency Resolution Process (CIRP) of Ila Metals was initiated by Somani Multibiz Private Limited, an operational creditor. Shivkumar Madanlal Baser was appointed as the Interim Resolution Professional (IRP) and subsequently as the Resolution Professional (RP) by the NCLT Ahmedabad Bench. Despite clear directions from the Committee of Creditors (CoC) to proceed with liquidation, the RP failed to move the process forward as per the provisions of the Code.
Issues
- Whether the RP was negligent in conducting the liquidation process?
- Whether the RP adhered to statutory timelines laid down within the Insolvency and Bankruptcy Code (IBC)?
Contentions of the Parties
RP’s Contention: The RP argued that the failure to seek CIRP extension was a procedural oversight and that stakeholders suffered no financial loss due to the company’s lack of assets. He also cited indecision by the CoC and non-payment of CIRP costs as contributing factors to the delay.
IBBI’s Findings: The IBBI noted that the RP failed to seek an extension of the CIRP within the mandatory 180-day period and delayed filing the liquidation application despite clear CoC instructions.
Reasoning and Analysis
The Disciplinary Committee of IBBI held that the RP’s actions reflected gross negligence and lack of professional diligence. The Committee found violations of Sections 12, 33(2), and 208(2)(a) & (e) of the IBC, read with Regulations 7(2)(a) and (h) of the IBBI (Insolvency Professional) Regulations, 2016, and Clauses 13 and 14 of the Code of Conduct.
Decision
The IBBI ordered the suspension of Shivkumar Madanlal Baser’s registration for a period of one year, effective 30 days from the date of issuance of the order. The order also directed that copies be shared with all CoCs where Baser was engaged.
Implications
The judgment highlights the importance of adhering to statutory timelines and professional diligence in insolvency proceedings. It also underscores the IBBI’s commitment to ensuring that insolvency professionals discharge their duties with the utmost professionalism and integrity.