Resolution Professional Under the Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code, 2016 (IBC) is often praised for transforming India’s debt recovery landscape. But behind every successful resolution, there is one key figure ensuring discipline, transparency, and continuity, the Resolution Professional (RP). In order to understand how insolvency truly unfolds on the ground, understanding the role, powers, and responsibilities of the RP is essential. This article focuses on a specific and critical pillar of the Code: the role of the Resolution Professional under the Corporate Insolvency Resolution Process (CIRP).

Understanding the Legal Foundation

The IBC clearly divides the RP’s involvement into two stages:

(1) Interim Resolution Professional (IRP)

Appointed under Section 16, the IRP takes charge immediately after admission of the insolvency application. The IRP’s first job is to take control of the corporate debtor, collect financial information, and form the Committee of Creditors (CoC).

(2) Resolution Professional (RP)

Once the CoC is formed, it may either confirm the IRP as the permanent RP or replace them under Section 22. This RP then becomes responsible for running the entire resolution process under the supervision of the CoC.

Once appointed, the RP exercises powers that previously belonged to the board of directors. Under Section 17, management shifts from the company’s board to the IRP/RP.

But, they do not own the company. They only operate it for the purpose of resolution, not profit.

The RP can:

• Take control of all assets

• Manage business operations

• Appoint professionals

• Invite, examine, and evaluate resolution plans

• Raise interim finance with CoC approval

• Ensure the company continues as a going concern

The RP cannot:

• Sell core assets without CoC approval

• Take decisions outside the CIRP objective

• Change the nature of business

This balance ensures accountability.

The Essar Steel Insolvency Case

The Essar Steel case, 2019 is one of India’s biggest insolvency matters. The role of the RP, Mr. Satish Kumar Gupta, was central to:

• managing a massive steel plant

• handling claims worth billions

• resolving disputes

• ensuring smooth operations during CIRP

  
  

Despite intense litigation, the RP maintained creditor confidence and preserved the company as a going concern. Ultimately, the Essar Steel resolution plan submitted by ArcelorMittal was approved for over ₹42,000 crore, one of the highest recovery rates under IBC. This case highlighted how the RP must act like a manager, investigator, mediator, and decision-facilitator all at once.

One of the most misunderstood aspects among students is that the RP is not a representative of creditors or debtors. The RP represents the process, not a party.

The RP must act:

• impartially

• transparently

• independently

  
  

The Supreme Court in Swiss Ribbons v. Union of India [WP (CIVIL) NO. 99 OF 2018] emphasized that the RP has administrative functions rather than adjudicatory ones. They supervise, but they do not decide disputes, that job rests with the NCLT.

Evaluation of Claims

Under Section 18, the IRP is responsible for receiving and verifying creditor claims. This includes:

• Financial creditors

• Operational creditors

• Workmen and employees

• Government departments

In many cases, disputes arise about the quantum or validity of claims. The RP must rely on:

• bank records

• financial statements

• transaction audits

• statutory filings

This step directly impacts the formation and voting strength of the CoC.

Running the Company as a “Going Concern”

One of the biggest challenges for an RP is to keep the corporate debtor operational. This often means:

• negotiating with suppliers

• maintaining staff morale

• ensuring cash flow

• preventing asset-stripping

• managing litigation

Imagine a textile company enters insolvency right before its peak production season. The RP must ensure:

• raw material supply is not disrupted

• workers continue production

• machinery is maintained

• orders are fulfilled

If the company shuts down, its value drops drastically, harming creditors. Running it as a going concern helps preserve value for the eventual resolution.

Resolution Plan Process

Under Section 25, the RP invites resolution plans and ensures they comply with:

• Section 29A (eligibility criteria)

• Section 30 (mandatory contents of a plan)

The RP does not choose the winning plan. They simply facilitate and present the plans to the CoC for voting. This separation ensures neutrality. If the CoC loses confidence in the RP, they can replace them with 66% voting share. This provision ensures that the RP remains accountable and disciplined.

The Resolution Professional is the operating engine of CIRP. Without a competent and neutral RP, the IBC mechanism would fail.

Understanding the role of RP is crucial because:

• It reveals how insolvency works in practice.

• It exposes students to real corporate decision-making.

• It highlights the Code’s balance between debtor and creditor interests.

• It demonstrates how law and business interact under stress.

  
  

The future of insolvency law in India will depend heavily on the quality, training, and integrity of RPs. Understanding their role is not just academically useful, it is essential for anyone aspiring to work in corporate law, litigation, finance, or restructuring.