Management of affairs of corporate debtor by interim resolution professional [ Section 17 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Management of Affairs of the Corporate Debtor The Interim Resolution Professional (IRP) is required to manage the affairs of the corporate debtor and keep it as a going concern. This role continues if the IRP is confirmed as the RP and, if the Committee of Creditor resolves to replace the IRP, the role of the IRP continues till an RP is appointed. Management of affairs of corporate debtor by interim resolution professional [ Section 17(1) ] From the date of appointment of the interim resolution professional,- (a) the management of the affairs of the corporate debtor shall vest in the interim resolution professional; (b) the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional; (c) the officers and managers of the corporate debtor shall report to the interim resolution professional and provide access to such documents and records of the corporate debtor as may be required by the interim resolution professional; (d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution professional. Access to books - Regulation 4 IBBI (Insolvency Resolution Process For Corporate Persons) Regulations, 2016 (1) Without prejudice to section 17(2)(d), the interim resolution professional or the resolution professional, as the case may be, may access the books of account, records and other relevant documents and information, to the extent relevant for discharging his duties under the Code, of the corporate debtor held with- (a) depositories of securities; (b) professional advisors of the corporate debtor; (c) information utilities; (d) other registries that records the ownership of assets; (e) members, promoters, partners, board of directors and joint venture partners of the corporate debtor; and (f) contractual counter parties of the corporate debtor. (2) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall provide the information within such time and in such format as sought by the interim resolution professional or the resolution professional, as the case may be. (3) The creditor shall provide to the interim resolution professional or resolution professional, as the case may be, the information in respect of assets and liabilities of the corporate debtor from the last valuation report, stock statement, receivables statement, inspection reports of properties, audit report, stock audit report, title search report, technical officers report, bank account statement and such other information which shall assist the interim resolution professional or the resolution professional in preparing the information memorandum, getting valuation determined and in conducting the corporate insolvency resolution process. IRP to run the Corporate Debtor as Going Concern [ Section 17(2) ] The interim resolution professional vested with the management of the corporate debtor shall- (a) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other documents, if any; (b) take such actions , in the manner and subject to such restrictions, as may be specified by the Board; (c) have the authority to access the electronic records of corporate debtor from information utility having financial information of the corporate debtor; (d) have the authority to access the books of account, records and other relevant documents of corporate debtor available with government authorities, statutory auditors, accountants and such other persons as may be specified; and (e) be responsible for complying with the requirements under any law for the time being in force on behalf of the corporate debtor. Relevant Case Law Subasri Realty Pvt. Ltd. Vs. N. Subramanian Anr. [CA (AT) (Ins.) No. 290 of 2017] NCLAT order dt. 22.02.2018 To ensure that the CD remains a going concern, all the directors/employees are required to function and assist the RP who manages the affairs of the CD during moratorium. If an officer or employee had the power to sign a cheque on behalf of the CD prior to the order of moratorium, such power does not stand suspended on the suspension of the Board of Directors nor can be taken away by the RP. State Bank of India Vs. Essar Steel India Ltd . NCLT, Ahmedabad Dated 02.08.2017 Once CIRP has commenced with the appointment of IRP, no doubt the Board of Directors would be suspended. That does not mean the entire machinery of the CD is suspended. Even after appointment of IRP, all the employees of the CD, top to bottom, would continue to function under the control of IRP instead of the Board of Directors. Steel Konnect (India) Pvt. Ltd. Vs. Hero Fincorp Ltd. NCLAT Dated 29.08.2017 IRP has not vested with any specific power to sue any person on behalf of the CD. However, in case of such difficulty, it is always open to IRP to bring to the notice of the AA for appropriate order. Bohar Singh Dhillon Vs. Rohit Sehgal (IRP) Ors . NCLAT Dated 09.05.2019 RP is required to act in terms of section 17(2)(e) of the Code for complying with the requirements under SEBI and the Regulations framed thereunder as well as the guidelines.