New Delhi: The Insolvency and Bankruptcy Board of India (IBBI) has prescribed minimum compensation for professionals preparing rescue plans for insolvent companies. It has also been stipulated that these professionals should not share the fees paid to any other professional hired to prepare the rescue plan.
The move seeks to protect the financial independence of resolution professionals, who have to make sensitive decisions relating to claims and bids of lenders by potential investors and are involved in handling competing interests of stakeholders. The new rules also encourage expedited bankruptcy resolution by allowing creditors to pay a performance-linked incentive to a resolution professional that affects how quickly a resolution plan is finalized and implemented.
IBBI’s Insolvency Resolution Procedure for Corporate Individuals (Third Amendment) Regulations, issued on Wednesday, states that the fee for a resolution professional will be decided by the bankruptcy petitioner or the committee of creditors. The fees of such professionals appointed from October 1 should not be less than the level prescribed in the new schedule.
Accordingly, for the entity in whose case the claim is admitted 50 crores or less, the minimum monthly fee to the resolution professional should be Hundred Thousand. If the accepted claim is between from 50 crores 500 crores, the minimum fee should be 2 lakh per month. The regulator has specified five such slabs of fee payment. In the case of sick companies, where the total amount of claims accepted is . More than 10,000 crores, the minimum fee payable to the resolution professional is Five crore.
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