Background: This paper deals with issue of fee of an insolvency professional (IP) acting as interim resolution professional (IRP)/ resolution professional (RP) in corporate insolvency resolution process (CIRP) who have significant role in ensuring timely completion of the CIRP in addition to the indispensable role played by each stakeholder.
Unlike fees of liquidator, the Board has not specified an indicative table of fees linked to any parameter, which would determine the fees payable to IRP/RP in CIRP. The fiduciary duties of fixation of remuneration of IP acting as an IRP/RP in CIRP, lies with applicant, the AA or CoC, as the case may be.
Proposal: In the aforesaid background, this paper covers the following issues: –
• Issue I: Components of fee of an IP in CIRP i.e.,
(a) Fixed Fee Structure and
(b) Performance-linked Incentive Fee.
(i) for timely resolution
(ii) for value maximisation
• Issue II: Having an escrow account mechanism for payment of fee to the IP.
Last Date of public comments: June 30, 2022
Source: Discussion Paper on Remuneration of an Insolvency Professional dated June 9, 2022
Existing provisions: IBBI (Insolvency Professionals) Regulations, 2016 (IP
Regulations), and circulars provided guidance in the matter of fixation of remuneration of IP and other professionals appointed by him. It broadly provides that the fees and costs charged by an IP must be transparent and a reasonable reflection of the work necessarily and properly undertaken.