A Quick Brief of Code of Conduct To Be Followed By Insolvency Professionals

The Insolvency and Bankruptcy Board of India released the notification regarding the implementation of the Insolvency and Bankruptcy Code. On November 29, 2016, these regulations legally came into effect. Building a solid legal framework for bankruptcy and insolvency concerns is the objective of the Act. 

An insolvency professional working in the fields of corporate and individual insolvency as well as corporate liquidation process now has access to additional opportunities to exhibit their skills. Closing a limited company is often the favoured approach for such processes. 

An Overview of Code of Conduct Followed By Insolvency Professionals

• To uphold their integrity, insolvency professionals must act honestly, transparently, and forthrightly in all professional interactions. 
• The misrepresentation of any facts or circumstances is prohibited, and those who work in the insolvency field should also avoid engaging in any behaviour that might damage their reputation.
• Insolvency professionals must maintain objectivity in all of their professional interactions by avoiding bias, conflicts of interest, coercion, and undue influence from any party.

• An individual appointed as a bankruptcy trustee, liquidator, interim resolution professional, or resolution.  professional is not permitted to either directly or indirectly procure any of the debtor's assets.
• An insolvency professional or his relative, must not accept gifts or other forms of hospitality that would compromise or impair his independence in that capacity. 
• In order to provide proficient professional service, insolvency professionals must keep up with necessary professional knowledge and skill upgrades.
• An insolvency professional is responsible for making sure that the confidentiality of any information pertaining to the insolvency resolution process, liquidation process, or bankruptcy process, as applicable, is always upheld. This will not, however, preclude him from revealing any information with the primary parties or the mandated by law. 
• An insolvency professional must not engage in activities that, in the Board's judgement, are inconsistent with the standing of the profession.
• An insolvency professional may not accept an assignment under the Code if. Under the Regulations relating to the procedures under the Code, he, any of his relatives. Any of the partners or directors of the insolvency resolution entity of which he is a partner or a director of, or the entity of which he is a partner or director is not independent in regards to the corporate person/debtor and its related parties.
• In order to timely perform their duties, insolvency professionals must cautiously plan their actions, connect with all parties involved, and abide by the time limits outlined in the Code and the rules, regulations, and guidelines thereon for insolvency resolution, liquidation, or bankruptcy process, as applicable.

Consequences of an Insolvency Professional's Failure to Adhere To The Code of Conduct 

As per the provisions of IBC and Regulation 11 of the IBBI (IPs) Regulations, 2016 of the IBC,2016. The IBBI can establish a disciplinary committee and issue the following punishments against an IP. Who violates the IBC, rules and regulations made thereunder:

• The disciplinary committee may impose a fine that is up to three times the loss. That the offender has already experienced or will likely experience, or three times the illegal profit. That IP has gained as a result of the violation, whichever is higher. The fine levied on IP must not exceed one crore rupees under these conditions. 
• The registration of the IP might be cancelled or suspended. 
• A warning
• A temperature suspension of the authorisation for assignment.

Conclusion

There are several judgments that the IBBI  Disciplinary Committee) and AA has made regarding IPs. If an insolvency professional doesn't uphold the code of conduct and foster trust among all stakeholders, the objectives of the Insolvency and Bankruptcy Code cannot be accomplished. 

Also, with the advent of insolvency technology, the work of Insolvency professionals has been aided at a drastic pace. With the correct usage of the technology. IPs can dispose of insolvency matters in a much more effective and efficient way.