Role of Insolvency Resolution Professionals Under IBC: Powers, Duties & Impact on CIRP

Insolvency has become a critical concern for financial institutions, lenders, and businesses across India. When a company fails to repay its debts on time, its financial viability deteriorates, often triggering legal proceedings under the Insolvency and Bankruptcy Code (IBC), 2016.

To ensure time-bound resolution, asset value maximisation, and creditor protection, the IBC provides for the appointment of an Insolvency Resolution Professional (IRP)—a central authority responsible for managing the corporate debtor during insolvency.

Under the Insolvency and Bankruptcy Code (IBC), Insolvency Resolution Professionals (IRPs) take control of the corporate debtor, manage operations, verify claims, protect assets, and ensure time-bound resolution. Their role is critical in safeguarding creditor interests, improving recovery outcomes, and maintaining compliance during the CIRP process.

Once insolvency proceedings are initiated, management control shifts from the debtor’s board to the IRP. This transition ensures neutrality, transparency, and procedural discipline during the Corporate Insolvency Resolution Process (CIRP).

The IRP:

• Preserves the corporate debtor as a going concern

• Prevents asset diversion

• Establishes creditor confidence

• Enables structured decision-making

Read more: Speeding Up Insolvency Proceedings Under IBC

Under the IBC, the IRP is vested with extensive authority to manage the debtor’s affairs.

Core Powers Include:

• Taking control and custody of assets

• Suspending powers of the board of directors

• Managing day-to-day business operations

• Accessing financial and operational records

• Representing the corporate debtor before NCLT

These powers ensure that insolvency proceedings are not delayed due to internal resistance or mismanagement.

One of the most critical responsibilities of the IRP is the verification and consolidation of creditor claims.

IRP Responsibilities:

• Receive and verify claims from financial and operational creditors

• Determine voting shares

• Constitute the Committee of Creditors (CoC)

• Facilitate transparent decision-making

The CoC plays a decisive role in:

• Approving resolution plans

• Deciding liquidation vs revival

• Appointing or replacing the Resolution Professional

Also read: Understanding Valuation Under IBC – Comprehensive Guide

The IRP is responsible for:

• Inviting resolution plans

• Examining compliance with IBC provisions

• Placing eligible plans before the CoC

Although the IRP does not select the resolution plan, their due diligence ensures only legally compliant and financially viable plans are considered.

Valuation plays a critical role here, as resolution applicants rely on fair value and liquidation value benchmarks.

Read more: Net Asset Method of Valuation of Shares – Practical Guide

The Insolvency and Bankruptcy Board of India (IBBI) regulates:

• Insolvency professionals

• Insolvency professional agencies

• Information utilities

Only individuals registered with IBBI are authorised to act as IRPs. This regulatory oversight:

• Reduces fraudulent practices

• Ensures ethical conduct

• Maintains professional accountability

Professionals eligible include:

• Chartered Accountants

• Cost Accountants

• Company Secretaries

• Advocates (as per updated regulations)

If the CoC decides liquidation, the insolvency professional:

• Takes charge as the liquidator

• Determines liquidation value

• Oversees asset sale and bidding

• Distributes proceeds as per statutory waterfall

Liquidation demands market-aligned valuation expertise to prevent distress sales and litigation.

visit: Valuation for Insurance & Risk Assessment

In many cases, insolvency affects small and medium-sized enterprises (SMEs) as well as large corporations.

IRPs ensure:

• Continuity of essential operations

• Payment of critical expenses and salaries

• Communication with lenders and employees

• Interim funding where required

Maintaining business continuity significantly improves resolution success rates.

Insolvency professionals:

• Cannot outsource core responsibilities

• Are personally accountable for non-compliance

• Must adhere strictly to IBC regulations

• Operate independently without external influence

Their position bridges:

• Debtors and creditors

• Resolution applicants

• NCLT and regulatory authorities

Valuation supports IRPs by:

• Establishing asset benchmarks

• Supporting resolution plan evaluation

• Identifying preferential or undervalued transactions

• Reducing disputes during CIRP

Accurate valuation directly improves speed, transparency, and creditor confidence.

• Insolvency Resolution Professionals are the backbone of IBC implementation

• Their authority ensures neutrality and time-bound outcomes

• Valuation and IRP roles are deeply interconnected

• Regulatory oversight by IBBI ensures credibility and trust

Need expert valuation or insolvency support during CIRP or liquidation?

Rakesh Narula & Co. assists lenders, IRPs, and stakeholders with IBC-compliant valuation, transaction analysis, and insolvency advisory services.

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1) Who is an Insolvency Resolution Professional (IRP) under the IBC?

An IRP is a registered insolvency professional appointed under the Insolvency and Bankruptcy Code (IBC), 2016 to take over management of the corporate debtor during CIRP, verify claims, protect assets, and support a time-bound resolution process.

2) What are the key responsibilities of an IRP during CIRP?

An IRP manages the corporate debtor as a going concern, takes custody/control of assets, collects and verifies creditor claims, constitutes the Committee of Creditors (CoC), and presents compliant resolution plans to the CoC as per IBC requirements.

3) What is the difference between an IRP and a Resolution Professional (RP)?

An IRP is appointed at the start of CIRP for the initial phase. The CoC may confirm the IRP as the RP or replace them. The RP continues the process, manages operations, and facilitates resolution plan evaluation and implementation.

4) How does the IBBI regulate insolvency professionals in India?

The Insolvency and Bankruptcy Board of India (IBBI) regulates insolvency professionals, agencies, and information utilities by issuing rules, monitoring conduct, and enforcing compliance standards to ensure ethical and transparent insolvency processes.

5) How does valuation support the work of an IRP/RP under IBC?

Valuation provides fair value and liquidation value benchmarks used for resolution planning, bidder confidence, liquidation decisions, and transaction review. Accurate, timely valuation helps reduce disputes and supports faster CIRP outcomes.