Who is Interim Resolution Professional under IBC?

The Insolvency and Bankruptcy Code, 2016 (IBC) was introduced to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner. The main objective of the Code is to ensure that the value of assets is maximised while giving a fair opportunity to all creditors.

One of the key persons responsible for achieving this objective is the Interim Resolution Professional (IRP). The IRP plays a crucial role at the beginning of the Corporate Insolvency Resolution Process (CIRP). As soon as the insolvency process begins, the management of the corporate debtor is handed over to the IRP. The IRP acts as the first officer of the process and ensures that the company continues to function as a going concern while the creditors decide the way forward.

Legal Framework for Appointment of IRP: Section 16 of the IBC

The appointment and tenure of the Interim Resolution Professional are governed by Section 16 of the Insolvency and Bankruptcy Code, 2016. This section provides a detailed procedure for appointing the IRP and defines the duration of his term.

Appointment on Insolvency Commencement Date

According to Section 16(1), the Adjudicating Authority (National Company Law Tribunal – NCLT) shall appoint an Interim Resolution Professional on the insolvency commencement date. Earlier, the law required the NCLT to appoint the IRP within fourteen days of the commencement date. However, this was changed by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 to ensure that the insolvency process begins immediately and without delay.

This amendment was important because any delay in appointing the IRP could allow the management of the corporate debtor to misuse its powers, transfer assets, or act in bad faith. By appointing an IRP from day one, the Code ensures transparency and control from the very beginning of the process.

Appointment When Application Is Made by a Financial Creditor or Corporate Debtor

Under Section 16(2), when the CIRP is initiated by a financial creditor under Section 7 or by the corporate debtor itself under Section 10, the professional proposed in the application shall be appointed as the IRP, provided that no disciplinary proceedings are pending against him.

This provision ensures that the applicant has a say in who manages the insolvency process initially, but only after the NCLT verifies that the proposed person is eligible and there are no ongoing proceedings against him before the Insolvency and Bankruptcy Board of India (IBBI).

Appointment When Application Is Made by an Operational Creditor

When an operational creditor files for CIRP under Section 9, there can be two situations:

• If the operational creditor has proposed a name for the IRP, the NCLT shall appoint that person, provided there are no disciplinary proceedings pending against him.
• If no proposal is made, the NCLT shall refer the matter to the Insolvency and Bankruptcy Board of India (IBBI), which will recommend the name of a qualified professional to act as the IRP.

According to Section 16(4), the Board must recommend such a professional within ten days of receiving the reference.

Tenure of the Interim Resolution Professional

Originally, Section 16(5) stated that the term of the IRP shall not exceed 30 days from the date of his appointment. However, this provision was amended by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018. The current provision states that the IRP shall continue till the date of appointment of the Resolution Professional (RP) under Section 22 of the Code.

This change was made to avoid a management vacuum during the transition period between the IRP and the final Resolution Professional. The amendment ensures that the corporate debtor remains under supervision at all times during the CIRP.

Eligibility and Qualifications of an IRP

The qualifications, registration, and eligibility of an Interim Resolution Professional are governed by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

To be registered as an insolvency professional, a person must:

• Be a major and of sound mind.
• Be a resident of India.
• Not be declared insolvent and not convicted for an offence punishable with imprisonment exceeding six months.
• Have cleared the Limited Insolvency Examination conducted by the IBBI within twelve months prior to applying for enrolment.
• Have completed a pre-registration educational course and other programmes like the National Insolvency Programme or Graduate Insolvency Programme approved by the Board.
• Possess a bachelor’s degree and at least 15 years of managerial experience, or 10 years of experience as a chartered accountant, company secretary, cost accountant, or advocate.

Only after verifying these qualifications, the Insolvency Professional Agency (IPA) grants a certificate of registration.

Duties and Powers of the Interim Resolution Professional

The IRP plays a central role in the CIRP. His duties are both managerial and administrative in nature. As soon as he is appointed, the powers of the Board of Directors or partners of the corporate debtor are suspended, and the IRP assumes full control of the affairs of the company.

The key duties and responsibilities of the IRP include:

1. Taking Control and Custody of Assets: The IRP must take custody of all assets, properties, and records of the corporate debtor to prevent any misuse or diversion.
2. Collection of Financial Information: The IRP determines the financial position of the corporate debtor by collecting information regarding its assets, liabilities, operations, and transactions.
3. Receiving and Verifying Claims: The IRP receives claims from all creditors and verifies them based on records available with information utilities and other sources.
4. Constituting the Committee of Creditors (CoC): Once claims are verified, the IRP forms the CoC, which includes all financial creditors. The CoC is the main decision-making body during the resolution process.
5. Management of Affairs: The IRP is responsible for managing the day-to-day affairs of the company as a going concern. He must ensure that employees and management cooperate during this period.
6. Preservation of Value: The IRP must take necessary steps to preserve the value of the property and assets of the corporate debtor.
7. Public Announcement: Within three days of his appointment, the IRP must make a public announcement about the commencement of the CIRP and invite claims from creditors in Form A as per the regulations.
8. Compliance with the Code of Conduct: The IRP must act in accordance with the First Schedule of the IBBI (Insolvency Professionals) Regulations, 2016, which requires him to act with integrity, objectivity, and independence, avoiding any conflict of interest.

Replacement or Confirmation of IRP under Section 22

After the formation of the Committee of Creditors, the CoC holds its first meeting within seven days of its constitution. During this meeting, the CoC decides whether to continue with the IRP as the Resolution Professional (RP) or to replace him.

• A decision in this regard must be taken with a 75% majority vote (now reduced to 66% as per later amendments).
• If the CoC decides to retain the IRP, the NCLT confirms the appointment.
• If the CoC decides to replace the IRP, it proposes another name and sends it to the NCLT.
• The NCLT then seeks confirmation from the IBBI regarding the eligibility of the proposed person.
• If the IBBI fails to respond within 10 days, the existing IRP continues to act as the Resolution Professional until further orders.

This provision ensures that the CoC has control over who will manage the process further, keeping in mind the interests of all stakeholders.

Role of the Resolution Professional after Confirmation

Once confirmed or replaced, the Resolution Professional continues the CIRP. He performs all the functions of the IRP and additional duties such as:

• Preparing an Information Memorandum containing financial and operational details of the debtor.
• Inviting and examining Resolution Plans from eligible applicants.
• Presenting the plans to the CoC for their consideration and approval.
• Submitting the approved plan to the NCLT for final approval under Section 31 of the Code.
  

The Resolution Professional ensures that the process is completed within the statutory timeline of 180 days, extendable by a further 90 days.

Judicial Interpretations on the Role of IRP and RP

The judiciary has played an important role in clarifying the powers and responsibilities of IRPs and RPs.

1. Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. (2019): The Supreme Court held that the Resolution Professional must manage the affairs of the corporate debtor as a going concern, collect and verify claims, convene CoC meetings, and facilitate the formulation of resolution plans. The Court emphasised that the Resolution Professional acts as a facilitator, not a decision-maker.
   
2. Swiss Ribbons Pvt. Ltd. v. Union of India (2019): The Court clarified that the Resolution Professional has no quasi-judicial powers. His functions are administrative in nature, which means that while verifying claims, he cannot decide disputes or reject claims arbitrarily. This ensures fairness and prevents misuse of authority.

These decisions highlight that the IRP and RP must act with neutrality and objectivity to maintain the trust of creditors and uphold the objectives of the IBC.

Importance of the IRP in the CIRP Framework

The IRP is the foundation of the entire Corporate Insolvency Resolution Process. The effectiveness and transparency of the CIRP depend largely on how efficiently the IRP performs his duties.

• The IRP ensures that the management of the debtor is under professional and impartial control.
• The IRP protects the assets of the debtor from being alienated or misused.
• The IRP provides accurate information to the creditors, enabling them to make informed decisions.
• The IRP acts as a bridge between the debtor and creditors, maintaining the balance of interests.

By acting as a neutral officer of the court, the IRP ensures that the process remains transparent and the objectives of the IBC—resolution, maximisation of value, and promotion of entrepreneurship—are fulfilled.

Conclusion

The appointment of an Interim Resolution Professional marks the beginning of a structured and disciplined approach to resolving corporate insolvency. The IBC has placed immense trust in the IRP to safeguard the assets, ensure transparency, and facilitate fair decision-making.

Through provisions like Section 16 and related regulations, the Code ensures that the insolvency process starts without delay, remains under constant supervision, and is conducted by qualified professionals. The judicial interpretations have further reinforced the importance of neutrality and administrative integrity in the role of the IRP.