Appointment of resolution professional [ Section 22 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Appointment of resolution professional First Meeting [ Section 22(1) ] The first meeting of the committee of creditors shall be held within 7 days of the constitution of the committee of creditors. Appointment of interim Resolution Professional In the first meeting The committee of creditors, by a majority vote of not less than sixty-six per cent of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional. [ Section 22(2) ] Written Consent Decision communication [ Section 22(3) ] Where the committee of creditors resolves under section 22(2)- (a) to continue the interim resolution professional as resolution professional subject to a written consent from the interim resolution professional in the specified form, it shall communicate its decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority; or (b) to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of the proposed resolution professional along with a written consent from the proposed resolution professional in the specified form. Adjudication Authority Forward the name of Resolution Professional to Board [ Section 22(4) ] The Adjudicating Authority shall forward the name of the resolution professional proposed under section 22(3)(b) to the Board for its confirmation and shall make such appointment after confirmation by the Board. Appointment of Resolution Professional [ Section 22(5) ] Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional. Relevant Case Laws Dharmendra Kumar Vs. IBBI and Others - NCLAT, Dated 24.08.2018 The appellant, who was appointed as the IRP, filed an application seeking discharge from the CIRP. The Adjudicating authority rejected the request, imposed a cost on the appellant, and observed that the attitude of the appellant was unprofessional. In appeal, referring to section 22 of the IBC, the NCLAT observed that if the CoC resolves to appoint the IRP as RP, consent is required from the IRP as to whether he intends to continue as RP or wants to be discharged. Without his consent, the IRP cannot be forced to continue beyond 30 days. It further observed that, given the facts and circumstances and after perusal of the records, the Adjudicating authority s directions to impose a cost and refer the matter to the IBBI for initiating action against the appellant was uncalled for. Allahabad Bank Vs. Anil Kumar NCLT, Ahmedabad Dated 28.07.2020 When there is a conflict and no consensus is reached in the CoC where financial creditors comprising of financial institutions and non-financial institutions by the majority of voting shares to appoint the IRP/RP, proposed by the applicant under section 9 of the Code, it is expedient to appoint an independent IRP/RP to break stalemate between the financial creditors. Committee of Creditors of LEEL Electricals Ltd. Through State Bank of India Vs. Leel Electricals Ltd. through its IRP, Arvind Mittal NCLAT dated 21.12.2020 The decision of appointment of IRP as RP or replacement of IRP by another RP falls within the ambit of section 22 of the Code and is a decision based on commercial wisdom of CoC which is not amenable to judicial review. When the CoC has passed the resolution with the requisite majority, it is not proper to say that the legal rights of IRP have been infringed.