Section 54B of The Insolvency and Bankruptcy Code, 2016.
54B. Duties of insolvency professional before initiation of pre-packaged insolvency resolution process.--(1) The insolvency professional, proposed to be appointed as the resolution professional, shall have the following duties commencing from the date of the approval under clause (e) of sub-section (2) of section 54A, namely:--
- (a)prepare a report in such form as may be specified, confirming whether the corporate debtor meets the requirements of section 54A, and the base resolution plan conforms to the requirements referred to in clause (c) of sub-section (4) of section 54A;
- (b)file such reports and other documents, with the Board, as may be specified; and
- (c)perform such other duties as may be specified.
- (2)The duties of the insolvency professional under sub-section (1) shall cease, if,--
- (a)the corporate debtor fails to file an application for initiating pre-packaged insolvency resolution process within the time period as stated under the declaration referred to in clause (f) of sub-section (2) of section 54A; or
- (b)the application for initiating pre-packaged insolvency resolution process is admitted or rejected by the Adjudicating Authority, as the case may be.
- (3)The fees payable to the insolvency professional in relation to the duties performed under sub-section (1) shall be determined and borne in such manner as may be specified and such fees shall form part of the pre-packaged insolvency resolution process costs, if the application for initiation of prepackaged insolvency resolution process is admitted.
Summary
- It outlines the duties of a proposed resolution professional before the pre-packaged insolvency process is formally initiated.
- The proposed professional must prepare a report confirming if the corporate debtor meets the eligibility criteria and if the base resolution plan conforms to the law.
- The professional is required to file their report and other specified documents with the Insolvency and Bankruptcy Board.
- The duties of the proposed professional cease if the application is admitted or rejected, or if the debtor fails to file the application within the declared timeline.
- The fees for these pre-initiation duties will form part of the formal pre-packaged insolvency resolution costs if the application is admitted.
Practical examples
FAQ
1. When do the duties of an insolvency professional begin under Section 54B of the Insolvency and Bankruptcy Code, 2016?
Under Section 54B of the Insolvency and Bankruptcy Code, 2016, the duties begin on the date of approval of their proposal by the unrelated financial creditors under Section 54A.
2. What must the pre-initiation report of the insolvency professional confirm under Section 54B of the Insolvency and Bankruptcy Code, 2016?
Under Section 54B of the Insolvency and Bankruptcy Code, 2016, the report must confirm whether the corporate debtor meets the eligibility requirements of Section 54A and if the base resolution plan is compliant.
3. Under what circumstances do the pre-initiation duties of the insolvency professional cease under Section 54B of the Insolvency and Bankruptcy Code, 2016?
Under Section 54B of the Insolvency and Bankruptcy Code, 2016, duties cease if the debtor fails to file the application within the declared timeline, or if the court admits or rejects the application.
4. How are the fees of the insolvency professional for pre-initiation duties treated under Section 54B of the Insolvency and Bankruptcy Code, 2016?
Under Section 54B of the Insolvency and Bankruptcy Code, 2016, the fees form part of the pre-packaged insolvency resolution process costs, provided the application is admitted by the Adjudicating Authority.