IBBI Plans To Rationalize Assignment Limits For Insolvency Professionals

(The Corner Office Journal) -- The Insolvency & Bankruptcy Board of India (IBBI) plans to amend the regulations related to assignments handled by insolvency professionals and extend the existing limit to interim resolution professionals (IRPs) and liquidators.

The IBBI has issued a discussion paper on review of limit on number of assignments being handled by insolvency professionals. It is seeking public comments on the proposals and the draft regulations by 1 September 2025.

“This discussion paper seeks to examine and address the concerns relating to delays in insolvency and liquidation processes, and the concentration of assignments among a few insolvency professionals,” the Indian insolvency regulator said.

The discussion paper proposes to amend the applicable regulations with the objective of ensuring a more equitable distribution of assignments, enhancing overall efficiency, and mitigating the risk of handling insolvency assignments by a limited number of insolvency professionals, it added.

The board said the number of registered insolvency professionals stood at 4,527 as of 31 March 2025, out of which 2,198 (about 49%) were holding Authorization for Assignment (AFA) issued by their insolvency professional agency.

Below are the key points from the IBBI’s proposal:

EXISTING FRAMEWORK & CHALLENGES

=> The regulations currently impose restrictions of 10 assignments as resolution professional (RP) in corporate insolvency resolution process (CIRP), with not more than three assignments having admitted claims exceeding 1,000 crore rupees each.

=> There is currently no specific cap on the number of assignments an insolvency professional may undertake as an RP, liquidator, or RP/bankruptcy trustee in proceedings against personal guarantors (PG) to corporate debtor (CD). The only express cap applies to assignments as RP in CIRPs.

=> The absence of similar restrictions on other critical roles has substantially diluted the effectiveness of this cap as several insolvency professionals continue to be involved in multiple assignments under other capacities simultaneously along with their regular professional practice.

PROPOSALS

Rationalization of Assignment Limits

=> The board proposed to extend the existing ceiling of 10 assignments in the capacity of RP to be extended to include assignments undertaken in the capacity of IRP and liquidator, with not more than three assignments having admitted claims exceeding 1,000 crore rupees.

=> Insolvency professionals, who are already handling 10 or more such assignments -- whether in the capacity of RP, IRP, or liquidator at the time of implementation of the revised framework -- will not be eligible to accept any new assignment until the number of their ongoing assignments falls below the revised threshold.

=> Only insolvency professionals, who are handling fewer than 10 such assignments --whether as RP, IRP, or liquidator -- will be eligible to take up new assignments, subject to compliance with the revised limit.

Proposed draft regulation to be inserted after regulation 7A in the IBBI (Insolvency Professionals) Regulations 2016 is as under:

“7B. Number of Assignments.

An insolvency professional who is not an insolvency professional entity, shall at any point of time, have not more than ten (10) assignments in aggregate as interim resolution professional, resolution professional in a corporate insolvency resolution process and as a liquidator in a liquidation process, of which not more than three assignments shall have admitted claims exceeding one thousand crore rupees each.”

(b) in Code of Conduct, Clause 22 and its Clarification shall be omitted.

Clarification On PG & Insolvency Professional Entity

=> The IBBI said as the framework for insolvency and bankruptcy of PG to corporate debtor is still at an evolving stage, the inclusion of such assignments may be considered at a later stage, based on experience and process maturity.

=> The regulator also said the proposed framework does not, at this stage, prescribe any cap on the number of assignments undertaken through an insolvency professional entity.

The IBBI said there is a need to revisit the scope of the existing framework to foster a level playing field and promote efficiency in the insolvency resolution process.

CODE OF CONDUCT - CLAUSE 6

Separately, the IBBI also proposed to delete Clause 6 from the Code of Conduct for Insolvency Professionals in order to avoid duplication and promote harmonization within the regulations.

Clause 6 of the Code of Conduct for Insolvency Professionals stipulates that “In cases where the insolvency professional is dealing with assets of a debtor during liquidation or bankruptcy process, he must ensure that he or his relatives do not knowingly acquire any such assets, whether directly or indirectly unless it is shown that there was no impairment of objectivity, independence or impartiality in the liquidation or bankruptcy process and the approval of the Board has been obtained in the matter”.

The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, specifically address the sale of assets during liquidation, the regulator said.

The IBBI also sought public comments on the proposal to delete Clause 6 from the Code of Conduct for Insolvency Professionals by 1 September 2025.

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