Insolvency halt gives a rude jolt to boutique IRPs

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Insolvency halt gives a rude jolt to boutique IRPs

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Several IRPs and lawyers are of the view that boutique firms largely dependent on operational creditors and small businesses will face a double whammy – along with the suspension of fresh cases for a year, the threshold for defaults has been increased to 1 crore from 1 lakh earlier.

Boutique insolvency resolution professional (IRP) advisory firms as well as chartered accountancy and company secretary firms that had ramped up operations over the past two years anticipating an increase in business are a worried lot after the filing of fresh cases under the Insolvency & Bankruptcy Code was suspended.

Several IRPs and lawyers are of the view that boutique firms largely dependent on operational creditors and small businesses will face a double whammy – along with the suspension of fresh cases for a year, the threshold for defaults has been increased to 1 crore from 1 lakh earlier.


“Clarity will come after the notification comes since the devil always lies in the details,” said Santanu T Ray, a senior partner at AAA Insolvency Professionals LLP. “If the ordinance puts a blanket ban on all cases, then it will be counterproductive. If the company is already defaulting for the last couple of years, even before the pandemic hit, then it’s good if lenders can take them to the resolution process.” Currently, about 115 insolvency professional entities are registered with the Inso ..

According to Ashish Pyasi, an associate partner at law firm Dhir & Dhir Associates, the proposed suspension will affect the practice of resolution professionals, who are generally chartered accountants or company secretaries.

“Due to strict timelines in the IBC, these professionals could not focus on other areas and had to remain focussed completely on IBC,” said Pyasi, who appeared in the insolvency resolution cases of Amtek Auto, Hotel Leela and Essar Projects, among others.

Source- Economic Times.