What Are the Reporting Obligations of an IRP?

The Insolvency Resolution Professional (IRP) plays a crucial role in the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). One of the key responsibilities of the IRP is to ensure transparency and keep all relevant stakeholders, including creditors and the Committee of Creditors (CoC), informed about the progress of the insolvency resolution process. The IRP is required to report various aspects of the process to ensure legal compliance, protect the interests of stakeholders, and maintain the integrity of the process.

Reporting Obligations of an IRP:

Filing of Progress Reports with the National Company Law Tribunal (NCLT):

The IRP is required to submit periodic progress reports to the National Company Law Tribunal (NCLT). These reports must provide updates on the steps taken in the Corporate Insolvency Resolution Process (CIRP), including the status of the company’s financials, the creditors' meetings, and the overall progress toward resolving the insolvency.

Typically, the IRP must file progress reports every two weeks during the initial period of the insolvency proceedings and then monthly after the appointment of a Resolution Professional (RP).

Reporting to the Insolvency and Bankruptcy Board of India (IBBI):

The IRP must regularly report to the Insolvency and Bankruptcy Board of India (IBBI), the regulatory body overseeing insolvency professionals and processes in India.

The IRP is required to submit reports on various aspects of the insolvency process, such as the formation of the Committee of Creditors (CoC), liquidation values, and any potential fraudulent transactions identified during the process.

Report on Financial Information and Statements:

The IRP is responsible for verifying the financial records of the company and ensuring that accurate financial information is available to the Committee of Creditors and other stakeholders.

They are obligated to report on the company’s financial statements and asset liabilities to help creditors assess the company’s position and make informed decisions during the resolution process.

Report on the Declaration of Claims by Creditors:

One of the early tasks of the IRP is to invite claims from creditors and validate them. The IRP must report to the Committee of Creditors regarding the claims received, the amount of the claims, and the process of admitting or rejecting these claims based on the verification process.

The IRP also has to file an updated list of admitted claims with the NCLT and the IBBI to ensure transparency.

Report on the Resolution Plan:

The IRP must ensure that the Resolution Plan prepared by the Resolution Professional is presented to the Committee of Creditors for approval.

The IRP must report any issues or concerns that arise in relation to the plan or if there are challenges regarding compliance with regulatory laws, the plan’s feasibility, or creditor interests.

Reporting on the Actions Taken Against Fraudulent Transactions:

If the IRP identifies any fraudulent transactions, as outlined in Sections 43, 45, 50, and 66 of the IBC, the IRP is required to report them to the Committee of Creditors (CoC), NCLT, and, if necessary, to relevant enforcement agencies.

The IRP must provide details of the fraudulent or preferential transactions discovered and actions taken to reverse them or report them to the authorities.

Adherence to Regulatory Compliance:

The IRP is responsible for ensuring that all the actions taken during the CIRP are in compliance with the IBC and other applicable laws. They must regularly report any legal or regulatory compliance issues to the NCLT and IBBI.

They also ensure that tax filings, statutory dues, and other regulatory requirements are met in a timely manner.

Final Report on the CIRP Process:

After the completion of the CIRP, the IRP is required to submit a final report to the NCLT. This report provides a summary of the resolution process, the outcome of the Resolution Plan, the creditors’ recovery, and the completion status of the process.

The report also includes details about liquidation (if applicable) or the outcome of the resolution proceedings.

Legal and Regulatory Oversight:

• Insolvency and Bankruptcy Code (IBC): The IBC specifies the reporting obligations of the IRP throughout the Corporate Insolvency Resolution Process (CIRP). Sections like Section 20, Section 25, and Section 30 define various aspects of the IRP's responsibilities in relation to reporting to stakeholders, such as the Committee of Creditors (CoC) and the NCLT.
• Insolvency and Bankruptcy Board of India (IBBI): The IBBI is the regulatory body responsible for overseeing insolvency professionals. The IRP must comply with the reporting requirements set by the IBBI, including filing reports on the progress of the CIRP and compliance with all relevant laws.
• National Company Law Tribunal (NCLT): The NCLT monitors the IRP's reports and progress in the CIRP, ensuring that the process adheres to the Insolvency and Bankruptcy Code and that all stakeholders are informed about the process.

Example:

Suppose an Insolvency Resolution Professional (IRP) is appointed for a company undergoing insolvency proceedings. The IRP’s first task is to:

• Validate the claims submitted by creditors and prepare a list of admitted claims.
• Regularly file progress reports with the NCLT detailing the steps taken in the Corporate Insolvency Resolution Process (CIRP).
• Report any fraudulent or preferential transactions identified during the investigation to the Committee of Creditors (CoC) and the NCLT.
• Ensure that the Resolution Plan complies with the IBC and that creditors’ interests are safeguarded, reporting on its progress and any modifications.

The IRP must submit a final report summarizing the entire process and detailing the recovery for creditors, whether the company is successfully resolved or moves into liquidation.