The Insolvency resolution professional (IRP) is appointed to carry out the resolution process of the corporate debtor. If this resolution process fails or is rejected then another method is adopted that is Liquidation. In that case the Adjudicating Authority has the power to appoint official liquidator to the process replacing the IRP.
In this article we have briefly discussed about how replacement of resolution professional as liquidator is carried out.
The Adjudicating Authority shall by order replace the resolution professional-
- The resolution plan submitted by the resolution professional under section 30 was rejected for failure to meet the requirements mentioned in section 30(2) of section 30; or (b) the Board recommends the replacement of a resolution professional to the Adjudicating Authority for reasons to be recorded in writing- section 34(4) of Insolvency Code, 2016.
- If resolution professional is to be replaced because the resolution plan was rejected, the Adjudicating Authority may direct the Board to propose the name of another insolvency professional to be appointed as a liquidator.
- The Board shall propose the name of another insolvency professional within ten days of the direction issued by the Adjudicating Authority.
- The Adjudicating Authority shall, on receipt of the proposal of the Board for the appointment of an insolvency professional as liquidator, by an order appoint such insolvency professional as the liquidator- section 34(7) of Insolvency Code, 2016.
This article has tried to focus on the aspect that if the resolution process is not met with successfully; there are other methods as well to deal with recovery of bad debts. Liquidation of corporate person is one such method that can also be opted under the Insolvency Code, 2016.
Disclaimer – The above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.