Sanskriti Taori, IV year of B.B.A.,LL.B. from New Law College, Bharti Vidhyapeeth University. Before the Insolvency and Bankruptcy Code, 2016 there were overlapping, laws and adjudicating forums to deal with the insolvency and bankruptcy matters in India. It took a considerable amount of time to resolve insolvency matters for the same reason. To quicken the process and to avoid confusions created by overlapping laws on the matters of insolvency this code is passed to consolidate and amend the insolvency laws in India.
Institutions provided under the Insolvency and Bankruptcy Code, 2016 are briefly explained hereunder:
1. Insolvency and Bankruptcy Board of India (IBBI):- This board consisting of 10 (ten) members (including Chairman) is constituted basically to regulate and overview the working of -
a) Insolvency Professionals Agencies
b) Insolvency Professionals, and
c) Information Utilities.
The Board is a body corporate and enjoys perpetual succession, have a common seal and can sue and be sued. The members here are appointed by the Central Government for the term of five years and can also be reappointed. The Board while exercising any power under this Code shall have the same power as that of a Civil Court for the matters relating to the issuance of summons, the examination of witnesses and order for production of books or other documents and inspection thereof.
The Headquarter of Insolvency and Bankruptcy Board is in Delhi and currently, Dr. M.S. Sohoo is the chairman of the Board. This Board has the power to constitute an advisory or executive committee to ensure that all of its functions are effectively discharged.
2. Insolvency Professionals Agencies:- To ensure that the Insolvency and Bankruptcy processes under this Code are effective these agencies are constituted to promote the services of insolvency professionals, and also to ensure development, growth and ethical conduct of the insolvency professionals. The certificate of registration to these agencies is given to them by the Insolvency and Bankruptcy Board of India (IBBI) which also have the power to renew or suspend or cancel the certificate. Provided that no action can be taken by IBBI against any applicant or agency without giving them a reasonable opportunity of being heard. The appeal against any order of IBBI lies to National Company Law Appellate Tribunal (NCLAT). These Insolvency Professional Agencies have the power to make their by-laws on matters relating to the registration of insolvency professional, their minimum standard of competence, ethical code of conduct, the mechanism for grievance redressal, matters relating to the collection of membership fees, grounds for levying penalties or expulsion of the insolvency professionals, etc. A governing board of Insolvency Professional Agencies may be set up by IBBI to ensure that these agencies are conducting themselves as per the provisions and in the manner prescribed by the Insolvency and Bankruptcy Code,2016. IBBI can also decide the number of independent members and insolvency professionals that are supposed to be part of the said governing board.
3. Insolvency Professionals:- For a person to be called as Insolvency Professional he has to first become a member of any Insolvency Professional Agency and then get himself registered with the Insolvency and Bankruptcy Board by making payment of prescribed fees in the manner provided for said purpose. To become a member of any Insolvency Professional Agency a person has to clear a limited Insolvency Examination. Only a person who is a resident of India, major, sound mind, solvent and possess prescribed qualification can be considered eligible to become an Insolvency Professional. Although, a non-resident can become a partner or director in any Insolvency Professional Entity.
Ever Insolvency Professional has to allow Insolvency Professional Agencies to inspect his records and has to submit the same with the Insolvency and Bankruptcy Board of India. Insolvency Professional is also supposed to comply with all the bye-laws that are provided by the Insolvency Professional Agency that he is a member of. It is also expected from an Insolvency Professional to take reasonable care while performing the functions prescribed to him.
4. Information Utilities:- By making an application to the Insolvency and Bankruptcy Board a person can get a certificate of registration to function as Information Utilities. This certification of registration can be suspended or cancelled by the Board if it is obtained by misrepresentation, or the Information Utilities have contravened any provision of the Code or has failed to comply with the requirements that are prescribed by the Insolvency and Bankruptcy Board. It is, however, to be noted that no action against any of the Information Utilities can be taken by the Board without giving them a reasonable opportunity of being heard.
The functions of these Information Utilities primarily consist of accepting information from any person intending to submit such financial information, and get the submitted information authorized by all the other parties concerned. After the information is being properly checked with the parties the same is stored by these Information Utilities in a universally accessible manner. The information stored can be accessible to any person intending to get the same. Any person can submit any financial information or can get access to it by paying prescribed fees. If a person wants to update or modify or rectify the information he has provided to the Information Utilities he can do so in the prescribed manner after payment of proper fees in that regard.
Thus whether the insolvency process is for any company or individual or partnership firm this Code contains all the relevant provisions. Smooth and effective compliance of the provisions of this Code is ensured by the creation of institutions mentioned above. To have effective check over activities carried out to comply with the provisions of this Code firstly, there are Insolvency Professionals that are members of Insolvency Professional Agency which again is controlled by Insolvency and Bankruptcy Board of India.