Insolvency and Bankruptcy Board of India (IBBI)

From Justice Definitions Project

What is the "Insolvency and Bankruptcy Board of India?"

Insolvency and Bankruptcy Board of India (IBBI) is a statutory body that regulates and oversees the insolvency and bankruptcy processes in India. Its primary goal is to assist companies and individuals who are suffering from financial losses. Its objective is to keep an eye on professionals managing these cases, and ensure fair treatment for all stakeholders, including creditors and debtors.

Official Definitions of IBBI

A "Board" means the Insolvency and Bankruptcy Board of India. Established under sub-section (1) of section 188. As per Section 3 of IBC, 2016.[1]

Under Section 188 of IBC, 2016, the IBBI is to be established from the date specified by the Central Government through a notification for the purposes of this Code.[2] Provides that the Board shall be a body corporate, having perpetual succession and a common seal, with the authority to acquire, hold, and dispose of both movable and immovable property, and to enter into contracts. The Board, in its corporate name, can also sue or be sued.[3] The head office of the Board shall be located in the National Capital Region, as specified by the Central Government through a notification.[4]

The Insolvency and Bankruptcy Board of India (IBBI) was established on 1st October,2016, under the Insolvency and Bankruptcy Code, 2016. It is a key pillar of the ecosystem responsible for implementation of the Code that consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.[5]

Composition of IBBI [Section 189]

The IBBI consists of 10 members in total  including:

  1. A Chairperson;
  2. three members from amongst the officers of the Central Government not below the rank of Joint Secretary or equivalent, one each to represent the Ministry of Finance, the Ministry of Corporate Affairs and Ministry of Law, ex -officio;
  3. one member to be nominated by the Reserve Bank of India, ex-officio;
  4. five other members to be nominated by the Central Government, of whom at least three shall be the whole-time members.[6]

Function of the Board [Section 196]

The functions of the IBBI are stated under section 196[7], of the Insolvency and Bankruptcy Code,2016 (IBC),the functions are as follows:

  1. Registration and Regulation: IBBI is responsible for registration and regulation of Insolvency Professional Agencies(IPAs), Insolvency Professionals(IPs) and Information Utilities(IUs), by following set standards and practices.
  2. Development and Promotion: It promotes development and regulates work and practices in respect of the working of the insolvency professional agencies, persons as well as Information Utilities to accomplish the objectives set under the IBC.
  3. Setting Standards: IBBI sets minimum eligibility criteria and standards to operate so that a uniform and professional approach to the entire insolvency ecosystem is provided.
  4. Curriculum Design: It gives the minimum curriculum for the examination of insolvency professionals so that such professionals are eligible to get enrolled as members of IPAs.
  5. Monitoring and Inspection: IBBI monitors the performance of IPAs, IPs and IUs, through regular inspections and investigations so as to identify and ensure compliance with the IBC and its regulations.
  6. Data Management: It collects and maintains records related to insolvency and bankruptcy cases, and disseminates information to the stakeholders as necessary.
  7. Guideline Issuance: The board issues necessary guidelines to IPAs, IPs, and IUs, promoting transparency and best practices in governance.
  8. Grievance Redressal: IBBI specifies mechanisms for redressal of grievances against IPs, IPAs, and IUs, ensuring complaints are addressed in compliance with the IBC.
  9. Research and Development: It periodically carries out studies, researches, and audits into the operations and performance of IPAs, IPs, and IUs with a view to continuous improvement.

Power of the Board [Section 196]

The powers of the IBBI are stated under Section 196 of the IBC, 2016,[8] along with the functions of the board. The powers given to the board is as follows:

  1. Regulatory Authority: IBBI has the authority to register, renew, withdraw, suspend or cancel the registration of IPAs, IPs and IUs.
  2. Levying Fees: It can collect fees or other dues for carrying out the objects of the IBC, such as the registration and renewal fee of IPAs, IPs, and IUs.
  3. Access to Information: The board can seek any information and records from the IPAs, IPs, and IUs, which helps in effective supervision.
  4. Civil Court Powers: IBBI shall have the powers of a civil court under the Code of Civil Procedure, 1908 while discharging its functions for purposes such as summoning persons, enforcing attendance, and inspection of documents, etc.
  5. Regulation Making: IBBI has the power to make regulations and guidelines on matters related to insolvency and bankruptcy required under the IBC, which includes mechanisms for time-bound disposal of assets.

Adjudicating Bodies

An Adjudicating Body is a third party that resolves disputes between two parties by making a decision based on evidence presented by both parties. Adjudicating bodies can be government-appointed or elected judges, or other quasi-judicial bodies.

As per Section 5 of the Insolvency and Bankruptcy Code,2016, an Adjudicating Bodies/Authorities are National Company Law Tribunal (NCLT) constituted under Section 408 of Companies Act, 2013.[9]

Debt Recovery Tribunal (DRT) is an adjudicating authority for individuals and firms. DRAT (Debt Recovery Appellate Tribunal) will be the appellate authority.[10]

Duties of Adjudicating Bodies

  • Admission or Rejection of Application: Adjudicating entities evaluate and determine the acceptance or dismissal of bankruptcy petitions submitted by creditors or debtors.
  • Moratorium Declaration: When an insolvency application is admitted, a moratorium is declared, suspending all legal proceedings against the debtor in order to preserve the status quo while the resolution process is underway.[11]
  • Appointment of Insolvency Resolution Professionals: They designate Insolvency Resolution Professionals to oversee the debtor's matters and assist in the resolution procedure.[12]
  • Approval of Resolution Plans: Upon assessing the viability and equity of the proposed resolution plans, approval is granted while ensuring adherence to the IBC.[13]
  • Ordering Liquidation: If a resolution is not feasible, creditors may opt to liquidate the debtor's assets in order to recoup their funds.[14]
  • Oversight and Directions: They offer essential guidance and supervise insolvency proceedings to guarantee compliance with legal requirements.[15]

Powers of Adjudicating Bodies

The power of the Adjudicating Bodies are defined under section 179(2) of IBC,2016.[16]

  • Summoning and Enforcing Attendance
  • Requiring Document Production
  • Receiving Evidence
  • Ordering Attachment and Sale of Assets

Service Providers

Service Provider is not explicitly defined under Insolvency and Bankruptcy Code,2016 but defined who is a financial Service Provider.

A “financial service provider” means a person engaged in the business of providing financial services in terms of authorization issued or registration granted by a financial sector regulator.[17] The Insolvency and Bankruptcy Code is not applicable to corporates in finance sector. Section 3(7) of Insolvency and Bankruptcy Code, 2016 states that “Corporate person” shall not include any financial service provider. Thus, the Code does not cover Bank, Financial Institutions, Insurance Company, Asset Reconstruction Company, Mutual Funds, Collective Investment Schemes or Pension.[18]

Although service providers are not explicitly defined under the IBC, these entities play pivotal roles within the insolvency framework. They are bound by regulations and guidelines established by the Insolvency and Bankruptcy Board of India (IBBI) to ensure conformity with the goals of the IBC.

  • Insolvency Professional Agencies : Are the entities that have been incorporated as not for profit companies to enrol, educate, monitor, regulate and guide the insolvency professionals. They are considered as front line regulators under the insolvency regime in India.[19]
  • Insolvency Professionals : Are those individuals who have registered with the IBBI and are involved in the insolvency resolution, liquidation, or bankruptcy process for the debtor. They manage all the assets and affairs of the debtor during such processes. An IP ensures that the process is fair and transparent and follows all the regulations and guidelines set by the IBBI.
  • Information Utilities : Are entities which are registered with IBBI under Section 210 of Insolvency and Bankruptcy Code (IBC) as per the eligibility criteria, act as data repositories of financial information which receive, authenticate, maintain and deliver financial information pertaining to a debtor with a view to facilitate the insolvency resolution process in a time bound manner.[20]

Appearances in Official Database

67TH REPORT OF STANDING COMMITTEE ON FINANCE - ACTION TAKEN BY GOVERNMENT ON 32ND REPORT - IBC: PITFALLS AND SOLUTIONS

The 67th Report of the Standing Committee on Finance (2023-24) acknowledges[21] “the two tier regulatory structure” or the “regulated self- regulation model” for the development of the Insolvency Professionals as recommended by the Bankruptcy Law Reform Committee (BLRC) Report dated 04th November 2015. This two-tier system combines self-regulation by Insolvency Professional Agencies (IPAs) with oversight by a central regulator like IBBI. The goal is to create a competitive framework where multiple IPAs set professional standards, enforce discipline, and ensure accountability, while being monitored by the regulator.

The BLRC believes competition among IPAs will drive better standards, rules, and enforcement. This approach avoids inefficiencies and stagnation that can come with a monopoly, ensuring the IP profession stays efficient and progressive over time.

Learning from mixed experiences of this country with some self-regulatory bodies like ICAI and ICSI as well as experiences of success achieved by financial sector regulators like SEBI, a two-tier system is designed as a balance of independence and responsibility, which goes well with an insolvency system under the IBC.

IBBI’s Annual Report

The Annual Report 2022-2023,[22] the Insolvency and Bankruptcy Board of India (IBBI) outlines the important developments in insolvency processes, regulatory actions, and capacity-building initiatives. The report provides details about the performance of the Board, service providers, legal actions, and the progress of insolvency and liquidation cases. In addition, the report has included advocacy programs, research publications, and financial performance of the Board.

Data on the receipt and disposal of grievances and complaints received

Data-1.png

The attached data presents the receipt and disposal of grievances and complaints till March 31, 2023. There are separate columns presenting the total number of complaints received and disposed throughout the years till the 31st of march,2023 under various modes such as Under regulations, through CPGRAM/ PMO/MCA/ other authorities and through other modes.

The attached data presents the receipt and disposal of grievances and complaints till March 31, 2023. There are separate columns presenting the total number of complaints received and disposed throughout the years till the 31st of march,2023 under various modes such as Under regulations, through CPGRAM/ PMO/MCA/ other authorities and through other modes.

Data of the Inspections of IPs conducted by IBBI

Data 2.png

The data provides the details of inspections of IPs conducted by the Board from 2017-2023. The inspection process is ordered, completed and ongoing. The numbers have been increasing throughout the years as the number of inspections in 2017-18 are very less than that of 2022-23.

A summary of CIRP

Table 23[23]

It provides a summary of CIRP, corporate liquidation and voluntary liquidation processes till March, 2023. The number of CIRP cases admitted to closed, number of cases ending in resolutions, number of cases ending in liquidation and the time taken to do so has been presented in this table.

Quasi- Judicial Functions

Disciplinary Actions[24]

Disciplinary actions against IPs are steps taken by regulatory authorities, such as the IBBI, to ensure accountability and uphold professional standards. The actions are taken when there is a failure to comply with the IBC, regulations, or the prescribed code of conduct. Common actions include issuing SCNs to seek explanations for misconduct, formal warnings or reprimands, monetary penalties, and in severe cases, suspension or cancellation of registration.[25] IPs may also face debarment from taking new assignments or be required to undergo additional training or compliance measures. These actions ensure the integrity and efficiency of the insolvency resolution process.

Show Cause Notice against the IP’s

Data 4.png

The table above displays the number of show cause notices issued to Insolvency Professionals (IPs) and the corresponding disposals over the years up to March 2023. The balance for each year is calculated by subtracting the number of notices disposed of from those issued

Show Cause Notice against RV/ RVE/ RVO

Data 5.png

The table shows the number of Show Cause Notices that were issued against RV/RVE/RVO in the year 2022-23. In total 16 notices were issued out of which 10 where disposed leaving 6 notices in balance.

Disciplinary Proceedings

Data 6.png

The table only shows the representation of how the table looks, as it lists the names of 71 Insolvency Professionals (IPs) along with the penalties imposed on them. It highlights different penalties assigned to each individual. The data showcases the regulatory actions taken against these professionals. The variations reflect the nature and severity of the violation.

Disposal of Show Cause Notice (SCNs)

Data 7.png

The information is about the resolution of  Show Cause Notices (SCNs) issued to entities such as Registered Valuer Organizations (RVOs), Registered Valuation Entities (RVEs), or Registered Valuers (RVs) during the financial year 2022-23. It indicates the actions taken or outcomes of these notices, such as penalties, warnings, or dismissals, for compliance or misconduct issues in that period.

MoUs Signed in 2022-23

MOU.png

The IBBI signed MoUs with the following institutions for developing a credible partnership to sensitise the stakeholders in the emerging field of insolvency and bankruptcy through conduct of certificate courses, diploma, postgraduate programmers, case studies, trainings, conferences, seminars, moot competitions, CPE, etc.[26]

IBBI’s Quarterly Newsletter

The Quarterly Newsletter (July 2024 - September 2024) outlines the activities and initiatives of the Insolvency and Bankruptcy Board of India (IBBI) in strengthening the insolvency framework. It covers regulatory reforms, development of insolvency professionals, and the progress of insolvency cases. The report also outlines the role of the Board in enhancing market efficiency, providing capacity-building programs, and addressing challenges in the insolvency process.

The regulations of IBC and the resolution discuss this.[27]

  1. ↑ The Insolvency and Bankruptcy Code, 2016, § 3(1).
  2. ↑ Id., § 188(1).
  3. ↑ Id., § 188(2).
  4. ↑ Id., § 188(3).
  5. ↑ IBBI, https://ibbi.gov.in/about.
  6. ↑ Id., § 189.
  7. ↑ Id., § 196.
  8. ↑ Id., § 196.
  9. ↑ Id., § 5; Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors.
  10. ↑ Id., § 181.
  11. ↑ Id., § 14.
  12. ↑ Id., § 16.
  13. ↑ Id., § 31.
  14. ↑ Id., § 33.
  15. ↑ Id., § 60.
  16. ↑ Id., § 179(2).
  17. ↑ Id., § 2(17).
  18. ↑ Id., § 3(7).
  19. ↑ "Insolvency Professional Agencies: Front-Line Regulators under IBC" by Dr. Binoy J. Kattadiyil and CS Nitika Manchanda, published by ICSI IIP (IPA of IBBI, New Delhi).
  20. ↑ IBC KNOWLEDGE CAPSULE 17 Framework for Information Utilities under IBC
  21. ↑ 67th Report of the Standing Committee on Finance: Action Taken by Government on 32nd Report - IBC: Pitfalls and Solutions, https://ibbi.gov.in/uploads/resources/6ea3289fe2832f553b9022115479ff54.pdf
  22. ↑ IBBI Annual Report, 2022-23, https://ibbi.gov.in/uploads/publication/7d662619a481a37f1e9d19d3a0b6e8fb.pdf
  23. ↑ Annual Report 2022-23. https://ibbi.gov.in/uploads/publication/7d662619a481a37f1e9d19d3a0b6e8fb.pdf
  24. ↑ Annual Report 2022-23. Annual Report 2022-23.
  25. ↑ IBBI takes action against 12 insolvency professionals so far this year, Livemint (Feb. 23, 2023), https://www.livemint.com/economy/ibbi-takes-action-against-12-insolvency-professionals-so-far-this-year-11713366209088.html
  26. ↑ Annual Report 2022-23.
  27. ↑ IBBI's Quarterly Newsletter (July,2024- September 2024), https://ibbi.gov.in/uploads/publication/edc044b410d37f0fd22cbe07a74665f3.pdf
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