Resolution Professional (RP) Under IBC 2016 | Nainit Savla & Associates

Resolution Professional (RP)

Q: What is the Information Memorandum and what must it contain?

The IM is the disclosure document prepared under Regulation 36 for distribution to eligible resolution applicants — covering assets, liabilities, financial statements, pending litigation, material contracts, employees, subsidiaries, and business operations. Shared confidentially with shortlisted, eligible applicants only.

Q: What is Section 29A and who is disqualified from being a resolution applicant?

Section 29A disqualifies: undischarged insolvents, wilful defaulters, persons with NPA accounts over 1 year, those convicted of specified offences, disqualified directors, and in certain circumstances promoters of the corporate debtor. Eligibility assessment is one of the most complex aspects of CIRP.

Q: What must a resolution plan contain to be approved by the CoC?

Payment of CIRP costs in priority; operational creditor repayment at liquidation value or plan amount (higher); management arrangements post-approval; implementation mechanism; legal compliance; and feasibility. CoC approval requires 66% voting share.

Q: Can the RP raise interim finance during the CIRP?

Yes, with CoC approval. Interim finance has priority in the payment waterfall in any approved plan or in liquidation — enabling the business to continue operating during CIRP and preserving going-concern value for resolution applicants.

Q: What happens if the CoC votes for liquidation instead of approving a resolution plan?

The RP applies to the NCLT for a liquidation order under Section 33. Once passed, the RP typically becomes the Liquidator and the liquidation process begins under a fresh moratorium.

The Resolution Professional (RP) is the licensed insolvency professional who manages the Corporate Insolvency Resolution Process (CIRP) following the Committee of Creditors' confirmation at its first meeting. The RP is the central figure in the CIRP — they manage the corporate debtor's day-to-day operations, prepare and circulate the Information Memorandum, invite resolution plans from prospective resolution applicants, facilitate the evaluation and approval process by the CoC, and ultimately submit the approved resolution plan to the NCLT for final order. We provide comprehensive advisory and support services for Resolution Professionals and parties involved in CIRP proceedings under the Insolvency and Bankruptcy Code, 2016.

CIRP Management

Day-to-day management of the corporate debtor's operations during CIRP — cash management, vendor relationships, employee retention, regulatory compliance, and preservation of going-concern value throughout the resolution process.

Information Memorandum

Preparation of the comprehensive Information Memorandum (IM) — the document provided to prospective resolution applicants containing all material information about the corporate debtor required to prepare a resolution plan.

Expression of Interest (EoI)

Preparation and publication of the Expression of Interest invitation — defining eligibility criteria under Section 29A of the IBC, managing the application process, and shortlisting eligible resolution applicants for the IM.

Resolution Plan Evaluation

Support for evaluating resolution plans received from resolution applicants against the evaluation matrix approved by the CoC — ensuring plans comply with Section 30 requirements and the CIRP Regulations.

CoC Meeting Management

Conducting and recording Committee of Creditors meetings — agenda preparation, voting facilitation, minutes recording, and ensuring all CoC decisions are documented and implemented in accordance with the IBC.

NCLT Filings & Representation

Preparation and filing of all required applications, reports, and compliance submissions with the NCLT during the CIRP — including the resolution plan application under Section 31 for NCLT approval.

The Resolution Professional's Central Role in the CIRP

The RP occupies a unique and demanding position — simultaneously managing the corporate debtor's business, satisfying the CoC's demands for information and process management, engaging with prospective resolution applicants, responding to NCLT directions, and ensuring the CIRP stays within the statutory timeline. The RP must act independently and in the interest of all stakeholders — not just the financial creditors — while maintaining operational viability of the business to maximise its resolution value.

If the CIRP fails to produce a CoC-approved resolution plan within the prescribed timeline — or if the CoC votes for liquidation — the RP's role transitions to that of a Liquidator unless the CoC appoints a different person for the liquidation process.

Key Functions of the Resolution Professional

Take over from the IRP and assume management of the corporate debtor
Prepare the Information Memorandum within the timeline prescribed by IBBI Regulations
Publish the Expression of Interest and manage the resolution applicant selection process
Identify and examine avoidance transactions (preferential, undervalued, extortionate) under Sections 43 to 51
Conduct due diligence on resolution applicants' eligibility under Section 29A
Present the resolution plan to the CoC for vote and transmit the approved plan to the NCLT
Oversee implementation of the approved resolution plan after NCLT approval
File the required compliance reports with IBBI during and after the CIRP

Frequently Asked Questions

What is the Information Memorandum and what must it contain?

The Information Memorandum (IM) is the primary disclosure document prepared by the Resolution Professional for distribution to eligible resolution applicants — enabling them to formulate a resolution plan for the corporate debtor. Under Regulation 36 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, the IM must include: the corporate debtor's assets, liabilities, financial statements, details of pending litigation, details of material contracts, a list of workmen and employees, details of its subsidiaries and associates, information about its business operations, and any other information relevant to a prospective resolution applicant's decision. The IM must be prepared confidentially and shared only with shortlisted, eligible resolution applicants.

What is Section 29A and who is disqualified from being a resolution applicant?

Section 29A of the IBC prescribes an extensive list of persons who are ineligible to submit a resolution plan — designed to prevent the corporate debtor from being acquired by those responsible for its insolvency or those with a track record of defaults. Key disqualifications include: (a) a person who is an undischarged insolvent; (b) a wilful defaulter under the RBI guidelines; (c) a person whose account is classified as NPA for more than one year and has not settled the dues; (d) a person convicted of offences with imprisonment of 2 years or more; (e) a person disqualified as a director under the Companies Act; and (f) promoters and related parties of the corporate debtor in certain circumstances. The eligibility assessment under Section 29A is one of the most complex aspects of the CIRP — we advise both resolution applicants and the RP on eligibility determinations.

What must a resolution plan contain to be approved by the CoC?

Under Section 30(2) of the IBC, a resolution plan must: (a) provide for the payment of insolvency resolution process costs in priority; (b) provide for the repayment of debts to operational creditors to at least the liquidation value or the amount payable under the resolution plan (whichever is higher); (c) provide for the management of the affairs of the corporate debtor after approval; (d) specify the implementation and supervision mechanism; (e) not contravene any provisions of law for the time being in force; and (f) be feasible and viable. The NCLT, while approving the plan, must be satisfied that the plan complies with the applicable laws and that the operational creditors' claims have been dealt with appropriately. CoC approval requires 66% of voting share.

Can the RP raise interim finance during the CIRP?

Yes. The Resolution Professional can raise interim finance during the CIRP to fund the ongoing operations of the corporate debtor — with the protection that interim finance raised with the CoC's approval has a priority claim in the waterfall of payments in any approved resolution plan or in liquidation. Interim finance allows the corporate debtor's business to continue operating during the CIRP period, which helps preserve its going-concern value and makes it more attractive to resolution applicants. The terms of interim finance must be approved by the CoC, and the RP must ensure that the terms do not disproportionately benefit the interim finance provider at the expense of existing creditors.

What happens if the CoC votes for liquidation instead of approving a resolution plan?

If the CoC votes for liquidation (by 66% of voting share) — either because no resolution plan was received, or because all received plans were rejected, or because the CoC affirmatively decides liquidation serves creditors better — the RP makes an application to the NCLT to pass a liquidation order under Section 33 of the IBC. Once the NCLT passes the liquidation order, the RP is typically appointed as the Liquidator (unless the CoC has appointed a different person) and the corporate debtor proceeds to liquidation. The CIRP moratorium ceases on the liquidation order, and the liquidation process begins under a fresh moratorium for the duration of liquidation proceedings.

CIRP Management — From IRP Handover to Resolution Plan Approval

Advisory support for Resolution Professionals and stakeholders in CIRP proceedings — IM preparation, CoC facilitation, Section 29A eligibility assessment, and NCLT filing support.

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