IBBI steps up heat on debt resolution professionals

IBBI had in 2022 permitted firms to take up the mandate of administering businesses going through the bankruptcy process in place of individual professionals, given that an organization will have more internal controls and governance systems.

- Gireesh Chandra Prasad

The Insolvency and Bankruptcy Board of India (IBBI) has intensified scrutiny of professionals hired by lenders to run bankrupt businesses, citing instances of alleged professional misconduct. The development highlights a major vulnerability in India’s framework for addressing industrial sickness, as evidenced by a series of orders issued by the regulator.

IBBI issued more than 20 disciplinary orders targeting resolution professionals in May alone, with regulatory action ranging from calls to professionals to be more diligent to suspending their registrations for periods spanning from several months to two years in certain instances.

In certain cases, a monetary penalty has also been imposed. IBBI has issued over 40 disciplinary orders since the beginning of January, about half of which have come in May.

Since last May, the regulator has issued over 100 disciplinary orders, official data showed.