Code of Conduct for Insolvency Professionals includes maintaining of integrity and professional competence for rendering professional service This Order disposed of the Show Cause Notice (SCN) issued to Mr. Sarvesh Kashyap who is an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (IBBI) without any direction against the IP. In this matter, the...
Access the exclusive LEGAL ERAStories,Editorial and Expert Opinion
Code of Conduct for Insolvency Professionals includes maintaining of integrity and professional competence for rendering professional service
This Order disposed of the Show Cause Notice (SCN) issued to Mr. Sarvesh Kashyap who is an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (IBBI) without any direction against the IP.
In this matter, the IBBI had issued the SCN, to the IP for accepting the assignment as Liquidator in Liquidation process of Komorebi Exports Private Limited (Corporate Debtor) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA.
The SCN was issued by IBBI against the IP for accepting the assignment of the liquidator in liquidation process of the Corporate Debtor (CD) after 31st December, 2019 for which public announcement was made on 7th February, 2020 without holding a valid Authorisation for Assignment (AFA) from the IPA.
The SCN alleged contravention of sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a), 7(2)(h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct for Insolvency Professionals
The IP submitted that the acceptance for the present assignment was given by him on 5th September, 2019 which is before 31st December, 2019, the date on which the said Regulation 7A of the IP Regulations came into force. Accordingly, he was under bonafide belief that AFA was not required as it was a continuing process and provisions of Regulation 7A of the said IP Regulations 2016 was not applicable at the time when consent was given for appointment as liquidator for CD.
The Disciplinary Committee (DC) noted that the IP was appointed as an interim resolution professional by National Company Law Tribunal (NCLT), Allahabad Bench vide order dated 10th January 2019 initiating Corporate Insolvency Resolution Process (CIRP) of CD and was confirmed as resolution professional by the Committee of Creditors (CoC) in its second meeting on held on 12th February, 2019 and the same was approved by AA.
Approval of decision of CoC for extension of CIRP period for another 90 days beyond 180 days was granted by AA vide order 9th July, 2019.
In the 12th meeting, it was resolved by the CoC to liquidate the CD as the resolution plan was not commercially viable. In the same meeting CoC authorized the IP to intimate the decision of CoC to AA and recommended IP's name for appointment as a liquidator. The AA passed an order for liquidation dated 5th February, 2020 and appointed the IP as liquidator.
The DC found that an order had been passed against the IP on 7th September 2020 for contravention of regulation 7A of IP Regulations by the Disciplinary Committee of IPA for accepting assignment as Liquidator after 31.12.2019 without holding a valid AFA in the matter of CD, wherein warning had been issued to Mr. Kashyap to be extremely careful and diligent and that he should act strictly as per law and similar action should not be repeated.
Keeping the aforementioned circumstances in view, the SCN was disposed of without any direction against the IP.