Daily Current Affairs : 10-June-2024
The Insolvency and Bankruptcy Board of India (IBBI) has introduced new guidelines for the appointment of Insolvency Professionals (IPs) as resolution specialists. These guidelines, which will come into effect from July 1, 2024, are designed to streamline the process and ensure greater transparency and efficiency within the insolvency and bankruptcy resolution system.
What is IBBI?
The Insolvency and Bankruptcy Board of India (IBBI) is a statutory body created under the Insolvency and Bankruptcy Code (IBC) of 2016. It is headquartered in New Delhi and operates under the Ministry of Corporate Affairs. The IBBI regulates the insolvency and bankruptcy ecosystem in India, including the functioning of insolvency professionals, agencies, and information utilities. Its primary function is to supervise and monitor insolvency and resolution processes for companies, individuals, and partnerships.
Key Highlights of the New Guidelines
The new guidelines aim to improve the appointment process of Insolvency Professionals (IPs), who are responsible for managing the resolution process of financially distressed entities. Some of the key changes include:
- Panel of IPs: A panel will be created to list eligible IPs for appointments. This will ensure that only qualified professionals are selected to handle resolution processes.
- Eligibility Criteria: The new guidelines will require IPs to meet specific eligibility criteria, including having prior experience in handling cases under the Insolvency and Bankruptcy Code (IBC).
- Prior Experience: One of the major changes is the requirement for IPs to have relevant experience in managing insolvency cases before being appointed. This ensures that resolution professionals are well-equipped to handle complex insolvency procedures.
- Enhanced Transparency: These guidelines aim to make the appointment process more transparent and standardized, helping maintain the credibility of the insolvency process.
Important Points:
IBBI New Guidelines: The Insolvency and Bankruptcy Board of India (IBBI) has introduced new guidelines for appointing Insolvency Professionals (IPs) as resolution professionals, effective from July 1, 2024.
Objective: The guidelines aim to streamline the process, improve transparency, and ensure efficiency in insolvency and bankruptcy resolution.
What is IBBI?:
- IBBI is a statutory body under the Insolvency and Bankruptcy Code (IBC) of 2016.
- It operates under the Ministry of Corporate Affairs, based in New Delhi.
- Its role is to regulate and supervise insolvency and bankruptcy processes for companies, individuals, and partnerships.
Key Highlights of New Guidelines:
- Panel of IPs: A panel will be created to list eligible IPs for appointments, ensuring only qualified professionals are selected.
- Eligibility Criteria: IPs will need to meet specific eligibility criteria, including prior experience in handling IBC cases.
- Prior Experience: IPs must have relevant experience in managing insolvency cases before being appointed as resolution professionals.
- Enhanced Transparency: The new guidelines aim to make the appointment process more transparent and standardized, preserving the credibility of the insolvency process.
Expected Outcomes:
- The guidelines will improve the quality and efficiency of the resolution process.
- The changes are expected to benefit both creditors and debtors, ensuring a more effective insolvency system in India.
Why In News
The Insolvency and Bankruptcy Board of India (IBBI) has issued new guidelines for appointing Insolvency Professionals (IPs) as resolution professionals, effective from July 1, 2024. These guidelines aim to streamline the appointment process by establishing a panel of qualified IPs, setting clear eligibility criteria, and requiring prior experience in handling assignments under the Insolvency and Bankruptcy Code (IBC). This move is designed to enhance the efficiency, transparency, and credibility of the insolvency resolution process, ensuring that only experienced professionals are entrusted with managing complex insolvency cases.
MCQs about Key Changes from IBBI
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When will the new guidelines for appointing Insolvency Professionals (IPs) by the IBBI come into effect?
A. January 1, 2024
B. July 1, 2024
C. October 1, 2024
D. March 1, 2024
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What is one of the primary aims of the new guidelines issued by IBBI?
A. To reduce the number of insolvency cases
B. To streamline the process of appointing Insolvency Professionals (IPs)
C. To increase the fees paid to Insolvency Professionals
D. To eliminate the need for panel selection
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What is a key eligibility requirement for Insolvency Professionals (IPs) under the new guidelines?
A. They must have a law degree
B. They must have prior experience in handling Insolvency and Bankruptcy Code (IBC) cases
C. They must have completed 10 years in the insolvency industry
D. They must have been appointed by a corporate entity
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How does IBBI intend to improve the appointment process of Insolvency Professionals (IPs)?
A. By reducing the number of IPs in the panel
B. By making the appointment process more **transparent** and **standardized**
C. By allowing only government-appointed IPs to handle cases
D. By increasing the number of cases per IP
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