IBBI Caps Assignments for Insolvency Professionals

New Delhi, Aug 13 (PTI) The IBBI has proposed imposing a cap on the number of assignments that insolvency professionals (IPs) can handle across key roles, in a bid to improve efficiency and ensure equitable distribution of work.

Currently, IPs are restricted to a maximum of 10 assignments as resolution professionals (RPs) in corporate insolvency resolution processes (CIRPs), of which not more than three can involve admitted claims exceeding Rs 1,000 crore each.

The proposed changes will broaden this ceiling to cover IRP and liquidator roles as well, recognising the comparable complexity and time demands of these assignments, the IBBI said in a discussion paper on Tuesday.

The move comes amid concerns that a small group of IPs is handling a disproportionately large number of assignments in some instances up to 25 cases while newly registered professionals face entry barriers due to uneven distribution of work.

As of March 31, 2025, out of 4,527 registered IPs, 2,198 held valid authorisations for assignment, with many juggling multiple roles alongside their regular practice.

Under the proposed framework, the IBBI said IPs already handling 10 or more assignments, whether as RP, IRP or liquidator, when the new rules come into force will not be permitted to take on fresh work until their active caseload falls below the threshold.

The changes will be effected through the deletion of Clause 22 of the Code of Conduct under the IBBI's (Insolvency Professionals) regulations, 2016, and the insertion of a new norm specifically capping total assignments.

In a separate discussion paper, IBBI has also proposed deleting Clause 6 from the Code of Conduct for Insolvency Professionals (IPs), citing duplication with existing rules that already govern the sale of debtor assets during liquidation and bankruptcy.

Under the clause, it prohibits IPs and their relatives from acquiring assets of a debtor during liquidation or bankruptcy process unless it is shown that there was no impairment of objectivity, independence or impartiality, and the board's approval has been obtained in the matter.

However, the board noted that similar prohibitions are explicitly laid out in the IBBI's Liquidation Process rules, and the Bankruptcy Process for Personal Guarantors to Corporate Debtors norms.

"It is proposed that to avoid duplication and for promoting harmonisation within the Regulations, Clause 6 be deleted from the Code of Conduct for Insolvency Professionals," the IBBI said.

Removing the clause from the Code of Conduct would avoid potential duplication and redundancy, and also ensure that specific prohibitions are primarily housed within the rules that govern the procedural aspects of asset realisation, it added.

The Insolvency and Bankruptcy Board of India (IBBI) has invited public comments on the proposals by September 1.