Resolution professional
Also called: Insolvency professional, RP · Topic: Banking Regulation, NPAs and Financial Stability · NCERT: Beyond NCERT
Meaning
A resolution professional (RP) is a licensed insolvency professional who takes charge of a company during the Corporate Insolvency Resolution Process (CIRP) under the IBC 2016. Once the NCLT admits a case, an Interim Resolution Professional first takes over. Later, a Resolution Professional takes over. The RP displaces the company's own management, runs the business, collects creditors' claims, invites resolution plans and places them before the Committee of Creditors (CoC). Insolvency professionals are regulated by the IBBI. They are one of the IBC's four pillars.
Example
When a power company defaults and is admitted to CIRP, its promoters lose control. The RP runs the plants and gathers bank and supplier claims. The RP then puts bidders' plans to the CoC within the 180-day deadline, which can be extended by 90 days.
Don't confuse with
- Committee of Creditors: the CoC decides whether to approve a plan, with 66% of the vote by value. The RP manages the process but does not choose the outcome.
- Pre-packaged insolvency: here the debtor keeps control and an RP only oversees. In a normal CIRP, the RP replaces management.
Related concepts
- Insolvency
- Bankruptcy
- Corporate Insolvency Resolution Process
- Committee of Creditors
- Liquidation waterfall
- Haircut
- Pre-packaged insolvency
- Financial and operational creditors
- Cross-border insolvency