When Creditor Proposes Name Of RP In Proceedings U/S 95 Of IBC, RP Must Give Declaration In Part IV Of Form C To Creditor: IBBI Clarifies
The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 21.12.2023, providing clarification regarding submission of particulars and declaration by Insolvency Professional (“IP”), in instances where a creditor proposes name of such IP to act as a Resolution professional in proceedings under Section 95 of Insolvency and Bankruptcy Code,...
The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 21.12.2023, providing clarification regarding submission of particulars and declaration by Insolvency Professional (“IP”), in instances where a creditor proposes name of such IP to act as a Resolution professional in proceedings under Section 95 of Insolvency and Bankruptcy Code, 2016 (“IBC”).
The application under Section 95 of IBC, seeking initiation of insolvency resolution process against Personal Guarantor, has to be filed by Creditor in 'Form C' of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (“IRP PGCD Rules”).
The IBBI has clarified that if the creditor proposes name of IP to be appointed as Resolution Professional in Section 95 of IBC proceedings, then such IP shall provide particulars and declaration in Part IV of Form C of the IRP PGCD Rules to the creditor, for the consideration of the Adjudicating Authority (NCLT).
Brief Background
Section 95 of IBC read with Rule 7 of IRP PGCD Rules, allows the creditor to file an application for initiation of insolvency resolution process against Personal Guarantors of Corporate Debtor. The creditor may file the application either himself or jointly with other creditors or through a Resolution Professional (“RP”) in 'Form C' given in the IRP PGCD Rules. Form C comprises of four parts and Part IV contains particulars and declaration by the Resolution Professional.
Where the application is filed through a Resolution Professional, the particulars and declaration by such Resolution Professional are provided in Part IV of the Form C of IRP PGCD Rules. In such cases, the Adjudicating Authority (NCLT) after confirming that there is no pendency in respect of disciplinary proceedings against the RP from the database shared by IBBI, appoints the proposed RP by an Order under Section 97(5) of IBC.
Clarification by IBBI
The IBBI has clarified that when a creditor files the application itself and recommends the name of IP to be appointed as Resolution Professional, then such IP shall also provide the particulars of and declaration in Part IV of Form C of the IRP PGCD Rules to the creditor, for the consideration of the NCLT.
Ref No. IBBI/II/62/2023