Insolvency Professional
Insolvency is the state of being not able to give the money owed, by an individual or company, on time. An insolvency professional is the one who is enrolled with the Insolvency and Bankruptcy Board of India (IBBI). They are registered with an insolvency agency and they are included in the dissolution method of an insolvent person, firms, partnerships, or LLPs. These experts are allowed to act on account of such insolvent individuals, organisations, etc. During the bankruptcy condition, insolvency professionals execute an important role in liquidating insolvency professional entity regulations, assets and additional settlement methods. This method has earned momentum with the government taking in strict standards and measures through the insolvency and bankruptcy code.
Benefits of an Insolvency Professional Agency
The following are the benefits of insolvency professional agency as named in Insolvency Professional Section 204 of the Insolvency Code:
- An insolvency professional agency has the basic function of giving company to insolvency professionals
- These companies frame the type of professional care and standards to the members registered under them
- They secure the privileges and rights of the members and safeguard their concerns
- They also request information about the member’s complaints and take actions to fix them
- The agency continuously observes member’s performance and they can check or remove membership anywhere and at any time required.
Eligibility Criteria for Insolvency Professional
The following are some of the basic requirements/insolvency professional eligibility for becoming an insolvency professional:
- The insolvency professional member should be a major, that is above 18 years.
- The insolvency professional must be a citizen of India.
- Further, the insolvency professional should not be convicted by any court for a crime punishable with custody or imprisonment for a term more than six months. Similarly, it must not be an offence including moral turpitude.
- Any character who has been convicted or sentenced to imprisonment for seven years or more is an offence and is not qualified to be enrolled as an Insolvency Professional.
- Moreover, the insolvency professional must not hold an undischarged bankrupt or has employed to be settled as an insolvent.
- The insolvency professional must be of a healthy mind with fitness and a decent person. To decide if a person is proper and fit, the following criteria are analysed:
- Honesty, trustworthiness, and quality
- Lack of opinions and restraint systems
- Support, including economic solvency and net worth.
Insolvency Professional Eligibility - Qualification and Experience
As a first step, any candidate must satisfy themselves listed with an insolvency professional agency. Listed below are the expected qualifications and experience for a candidate to be registered in an insolvency professional course:
- They should clear the National Insolvency Examination
- Additionally, they can clear the Limited Insolvency Examination in which case the candidate should have 15 years of knowledge in administration. After getting a bachelor’s degree from a university authorised or approved by law (or)
- Has cleared the Limited Insolvency Examination and has 10 years of practice as a Chartered Accountant (CA) and is a member of the institution of Chartered Accountants of India
- He/she could be a company secretary and is a part of the institute of company directors of India
- Further, he/she can be an advocate registered with a bar council
- Additionally, a person can be a cost accountant and is a part of the Institute of Cost Accountants of India.
Registration As Insolvency Professional
For a limited time, any individual who qualifies as a company secretary, CA (Chartered Accountant), cost accountant, or advocates with over 15 years of practice can enhance an insolvency professional without getting into insolvency examination. To be enrolled, trained professionals can present a form with a non-refundable administration fee of ₹5000.
People selected under this system would be registered for a limited time and cannot accept any responsibility as an insolvency professional after the expiry of Insolvency Professional certification.
Functions of an Insolvency Professional
The basic function of an Insolvency Professional is to evaluate the financial condition of the business, organisation, LLPs, private, etc. It is to guarantee a continuous process of its dissolution. These experts, in some reasonable cases, look for chances to protect businesses. Otherwise, the principal purposes of an insolvency professional are:
- Examine the financial report of the business and know the position.
- Make methods to trade all the assets of the liquidating individual or business or company.
- Experience the receivables’ location of the company or an individual and look at the collection method.
- Attend regular conversations with buyers or bankers and maintain their agreement process.
- Review and accept the creditor's rights as per the accessible funds. It is one of the main parts of insolvency professionals.
- Involve in the stock distribution method after placing aside the money needed to pay the price of liquidation.
- Deal with the different competing businesses.
- Insolvency professionals are expected to prepare and submit a statement to the National Company Law Tribunal about the following:
- Liquidation form and method: This has to be presented within 75 days of initiation of the process by the insolvency professional
- A complete report on the asset memorandum
- Interim statement on how the liquidation method is improving from time to time
- Details about the purchase of all the assets
- Conversation with the buyers and lenders and the outcomes arrived
- The final statement before the dissolution of the partnership, company, and others.
Documents Required for the Registration of an Insolvency Professional
- Two sets of Form A (for insolvency professional agency and IBBI)
- Copy of proof of residency.
- Samples of documents in the assistance of professional qualification, educational requirements, and insolvency examination criteria.
- Copies of reports describing the practice as:
- A company director registered with the Institute of Company Secretaries of India.
- Further, a chartered accountant registered with the Institute of Chartered Accountants of India.
- A cost accountant registered including the Institute of Cost Accountants of India. Or an advocate filed with the Bar Council of any state in India
- Copies of documentation of work from the company(s), defining the time of such employment.
- Business report or IT Returns for the last three years.
- Photocopy of certificate of a professional group with an insolvency professional agency.
- Two passport size photos.
- Further, two cheques or DDS of Rs 11800/- (Rs 10,000 + 18% GST)
- Two copies of self-declaration, the setup of the same is provided in the Annexure I
- Directors Identification Number (DIN). The candidate has to consider the DIN on the basis of self-declaration.
- Moreover, two copies of CIBIL Report
- Two copies of the GST Registration certificate, if required. (Extension of GST amount returned shall only be provided to certified people and the firm's GSTN shall not be brought into scope).
Why Vakilsearch?
Vakilsearch is India’s largest professional platform of lawyers, chartered accountants, and company secretaries-with years of experience behind. We execute legal work for over 1000 companies and LLPs every month, by leveraging our tech capabilities, and the expertise of our team of legal professionals.
9.1 Customer Score
We make your interaction with the government as smooth as possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.
300-Strong Team
With a team of over 300 experienced business advisors and legal professionals, you are just a phone call away from the best in legal services.
Access To Experts
We provide access to reliable professionals and coordinate with them to fulfil all your legal requirements. You can also track the progress on our online platform, at all times.
Realistic Expectations
By handling all the paperwork, we ensure a seamless interactive process with the government. We provide clarity on the incorporation process to set realistic expectations.
