In exercise of the powers conferred by sections 196, 207 and 208 read with section 240 of the Insolvency and Bankruptcy Code

## Report on Insolvency and Bankruptcy Board of India Insolvency Professionals Second Amendment Regulations, 2022 **1. Executive Summary:** This report analyzes the Insolvency and Bankruptcy Board of India (IBBI) Insolvency Professionals Second Amendment Regulations, 2022, as published in the Gazette of India on September 13, 2022. This amendment modifies the Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations, 2016. The core purpose of this amendment is to introduce a prohibition on insolvency professionals sharing fees or charges with professionals and/or support service providers appointed during insolvency processes. This report details the specific change, its likely rationale, target audience, and potential impact on insolvency proceedings. **2. Introduction:** This report provides an informative overview of the Insolvency and Bankruptcy Board of India Insolvency Professionals Second Amendment Regulations, 2022, based solely on the text of the official notification published on September 13, 2022. The report aims to clarify the amendment's provisions and implications for relevant stakeholders. **3. Policy Overview:** * **Amendment to:** Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations, 2016. * **Core Objective(s):** Based on the provided text, the objective is to regulate the financial relationships between insolvency professionals and other service providers within the insolvency resolution process, specifically to prevent fee sharing. **4. Background and Rationale:** This amendment likely aims to address potential conflicts of interest or unethical practices where insolvency professionals might be incentivized to appoint specific service providers (e.g., legal counsel, valuers) based on fee-sharing arrangements rather than solely on the basis of competence and the best interests of the insolvency process. The amendment seemingly aims to ensure transparency and fairness in the selection of service providers and prevent inflated costs being passed on to the stakeholders. **5. Key Provisions / Changes:** The amendment introduces a new clause, 26A, to the First Schedule of the Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations, 2016. * **Specific Part of Original Policy Changed:** The First Schedule of the Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations, 2016 is amended through the addition of a new clause. * **New Rule/Provision:** "26A. An insolvency professional shall not accept share any fees or charges from any professional and/or support service provider who are appointed under the processes." * **Effect of the Change:** This new clause strictly prohibits insolvency professionals from entering into any fee-sharing arrangement with professionals or support service providers appointed during the insolvency resolution process. This restricts financial incentives for insolvency professionals beyond their own fees. **6. Target Audience and Stakeholders:** The primary target audience includes: * **Insolvency Professionals:** The amendment directly regulates the conduct of insolvency professionals. * **Professionals and Support Service Providers:** The amendment impacts professionals and support service providers who are appointed under the insolvency processes such as valuers, legal advisors, and other consultants. * **Other Stakeholders:** Indirectly, this affects all stakeholders in the insolvency process, including creditors, debtors, and potential investors, as it aims to promote fairness and transparency in the process. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Insolvency and Bankruptcy Board of India (IBBI) is responsible for enforcing these regulations. * **Timelines or Procedures:** The regulations came into force on the date of their publication in the Official Gazette (September 13, 2022). The text does not explicitly define implementation procedures. * **Implementation Specific to the Change:** It is expected that IBBI will monitor compliance with this new provision through audits, inspections, and complaint handling mechanisms. **8. Expected Outcomes / Impact of Changes:** The intended outcome of this amendment is likely to: * **Reduce Conflicts of Interest:** By prohibiting fee-sharing, the amendment minimizes potential conflicts of interest and promotes impartial decision-making by insolvency professionals. * **Ensure Fair Selection of Service Providers:** The amendment aims to ensure that professionals and support service providers are selected based on their qualifications and competence, rather than on fee-sharing agreements. * **Promote Cost Efficiency:** This change may limit the potential for inflated costs associated with service providers, ultimately benefiting stakeholders by preserving asset value during insolvency proceedings. * **Increase Transparency:** The amendment promotes a more transparent and accountable insolvency resolution process. **9. Conclusion:** The Insolvency and Bankruptcy Board of India Insolvency Professionals Second Amendment Regulations, 2022, introduces a significant change by prohibiting fee-sharing between insolvency professionals and service providers. This amendment aims to enhance the integrity and efficiency of the insolvency resolution process by mitigating conflicts of interest and promoting transparency. This will likely lead to a fairer and more cost-effective process for all stakeholders involved in insolvency proceedings.

Key Entities Referenced