Opportunities for CMAs Under IBC, 2016

Abstract

Opportunity-1

The Insolvency Resolution process in India has, in the past involved the simultaneous operation of several statutory instruments. These include the Sick Industrial Companies Act, 1985, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, and the Companies Act, 2013. Broadly, these statutes provided for a disparate process of debt restructuring, and asset seizure and realization in order to facilitate the satisfaction of outstanding debts.

As is evident, a plethora of legislations dealing with insolvency and liquidation led to immense confusion in the legal system, and there was a grave necessity to overhaul the insolvency regime. All these multiple legal avenues and a hamstrung court system led to India witnessing a huge piling up of non-performing assets of financial system, and creditors waiting for years to recover their money. Banks in India are going through unprecedented times with stressed loan portfolio touching all-time high. There is an apprehension that there could be further significant additions as many stressed loan accounts have been disguised as standard.

Realizing the problem, RBI has attempted to force Banks to clean up balance sheets and come out with many regulatory steps aimed at improving banks ability to deal with such stressed accounts. However, such frameworks have proved unsuccessful.

In this scenario, the Indian Government introduced the Bankruptcy and Insolvency Code, 2016 which Consolidated the existing frameworks and created a new institutional structure.

The Code creates time-bound processes for Insolvency Resolution of Companies and Individuals which thereby will help India improve its World Bank Insolvency Ranking. The

Code has opened a new opportunity for professionals particularly the Cost Accountants.

Opportunities for CMAs: When an application is filed with NCLT by financial creditors, operational creditors and corporate debtors, CMAs will get the following opportunities subject to completion of Limited Insolvency Examination and other eligibility criteria as stipulated by IBBI in this regard. Various Opportunities are:

• Interim Resolution Professionals-IRP.
• Resolution Professionals-RP.
• Liquidators.
• Bankruptcy Trustees.
• Representative for class-of-creditors.
• Forensic Auditor (no qualification specified in the Code).
• Transactions Auditor.
• Other services like registered valuer (Subject to completion of IBBI Valuers Examinations i.e., land and building, plant and machinery and securities or financial assets valuation)
• Preparation of ‘Information Memorandum’.
• Preparation of ‘Resolution Plans’.
• Administrator as per SEBI Regulations, 2018.