Why You have to become an Insolvency Practitioner?
Article Written by : CA Rohit Ruwatia
Insolvency is
possibly the most demanding career option a professional can undertake. It is
certainly one of the most challenging, involving and rewarding.
Insolvency
practitioners can find themselves running businesses, constructing and
negotiating deals or investigating and advising on the viability of a business
and its restructuring (and, sometimes, the integrity of its directors). The
work of the insolvency practitioner affects the lives, prospects and
livelihoods of both creditors and debtors. Insolvency work is as much about
people as it is about figures. Insolvency practitioners need the skills to deal
with creditors, anxious directors, concerned employees and a range of other
stakeholders in the business. The insolvency scene is always changing. Even in
these cases, often regarded as the ‘end of the line’ for businesses,
imagination and determination are still needed to preserve as much of the
business (and its associated jobs) as possible, or as a last resort to get the
best possible price for its assets.
Even where a formal insolvency procedure is
necessary, in many cases a positive approach to the rescue of businesses and
jobs can be taken through the application of administrations, administrative
receivership and voluntary arrangements. In the current environment, with
personal debt at record levels, it is vitally important individuals get the
correct advice about the options open to them to resolve their difficulties. As
licensed insolvency practitioners are trained in all aspects of the law and
procedure, they are best placed to provide that advice and only they can act as
supervisors of individual voluntary arrangements or as trustees in bankruptcies.
The profession will be able to rescue increasing numbers of jobs and businesses
in recent years, both because of legislative changes and the changing attitudes
of creditors. Overall, some 20 per cent of insolvent businesses are rescued in
part or as a whole and one in every six insolvent individuals enters a
voluntary arrangement as an alternative to bankruptcy.
OPPORTUNITIES IN CORPORATE
INSOLVENCY AND RESTRUCTURING
Just like a person requires treatment to treat his
disease, a sick company also requires some form of treatment to overcome its
problem of debts. This treatment may be in the form of restructuring of a
company. Restructuring is the corporate management term for the act of
reorganizing the legal, ownership, operational, or other structures of a
company for the purpose of making it more profitable, or better organized for
its present needs. Alternate reasons for restructuring include a change of
ownership or ownership structure, de-merger, or a response to a crisis or major
change in the business such as bankruptcy, re positioning, or buyout.
Restructuring may also be described as corporate restructuring, debt
restructuring and financial restructuring. There are a broad range of
opportunities that arise from corporate insolvency and financial
restructurings.
1. Spotting and evaluating distressed companies for
restructuring and rescue planning.
2. Reviewing the
various risks involved in restructuring.
3. Developing risk
mitigation strategies.
4. Working out a
detailed bankable financial structure of the business.
5. Working out a
detailed plan for restructuring the business from all angles.
6. Assessment of
distressed assets, cash position, due diligence and turnaround feasibility.
7. Advice on
optimum utilization of resources.
8. Drafting
insolvency petitions.
9. Representation
and registration of sick companies with BIFR.
10. Representation
before the Debt Recovery Tribunals.
11. Representation
before the NCLT or NCLAT
12. Negotiating
settlements.
13. Advisory in
relation to a merger or acquisition or takeover.
14. Advisory
services to management on an ongoing basis.
What is the role of insolvency professional?
He/She takes up
matters relating to insolvency of individuals, partnerships and liquidation
of companies.
He advises and monitors his clients in matters related to insolvency, bankruptcy and liquidation. |
How many insolvency professionals does India need?
Though there
isn’t any clear number, the IPA’s estimates that more than a lac cases
relating to insolvency, bankruptcy and liquidation are pending and from now
only insolvency professionals can handle these cases.
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The number of Insolvency professionals enrolled till now:
Less than 100 insolvency professionals have been enrolled till now. Enrollment of insolvency professionals has been started from December 1.
Recognized Insolvency Professional Agency (IPA)
The New
Insolvency and Bankruptcy Code, 2016 stipulates the maximum time to be taken
to liquidate a company to 180 days with an one time extension of 90 days,
while earlier it used to take at least four years for the same. With the new
law, arises the new opportunities for youth in the form of insolvency
professionals. To cater to the huge insolvency and liquidation market and
produce insolvency professionals, The Institute of Chartered Accountants of
India (ICAI), The Institute of Company Secretaries of India (ICSI) & The
Institute of Cost Accountant of India (ICWAI) has been given recognition as
an Insolvency Professionals Agency.
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Time factor
Data from World
Bank show that the number of years taken to resolve insolvency in major
economies such as the US, the UK and China are 1.5, 1 and 1.7 years,
respectively, in 2016. For India, the same is 4.3 years. According to
officials, the bankruptcy code is a complete departure from the earlier Sick
Industrial Companies (Special Provisions) Act, 1985, where there were delays
in resolution of cases. "When decisions are taken in a time-bound
manner, there is a greater chance that a corporate entity can be saved as a
going concern and productive resources of the economy (labour and capital)
can be put to best use," a finance ministry statement said.
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What qualifications do you need to practice as insolvency
professional?
An individual
shall be eligible for registration, if he -
a. has passed the
National Insolvency Examination.
b. has passed the
Limited Insolvency Examination, and has fifteen years of experience in
management, after he received a Bachelor’s degree from a university established
or recognized by law.
c. has passed the
Limited Insolvency Examination and has ten years of experience as -
(i) a
chartered accountant enrolled as a member of the Institute of Chartered
Accountants of India.
(ii) a
company secretary enrolled as a member of the Institute of Company Secretaries
of India.
(iii) a
cost accountant enrolled as a member of the Institute of Cost Accountants of
India, or
(iv) an
advocate enrolled with a Bar Council.
For Temporary Enrolement,please click the following link:
Limited Insolvency Examination
Format
of Examination
The format of
examination is as under:
a. The
examination will be conducted online (computer-based in a proctored
environment); with objective multiple choice questions;
b. The duration
of the examination will be two hours;
c. A candidate
will be required to answer 90 questions in two hours for a total of 100
marks;
d. There will be
negative marking of 25% of the marks assigned for the question;
e. Passing mark
for the examination is 60%;
f. Passing
candidates will be awarded a certificate by the Board;
g. A candidate
will be issued a temporary mark sheet on submission of test paper; and
h. No workbook
or study material will be provided.
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Frequency of
Examination
The frequency of
Examination is as under:
a. The
examination will be available from 100 + locations in the country;
b. The
examination will be available from 31st December, 2016 between 9:30
AM and 5:30 PM;
c. The enrolment
for examination will be open from 15th December, 2016.
d. A candidate
needs to enroll for examination at www.nism.ac.in. He
needs to select IBBI-Limited Insolvency Examination and enroll himself for
the examination by choosing the time, the day and the examination centre for
his examination;
e. A candidate
needs to provide PAN and Aadhaar to enroll for the examination; and
f. A candidate
needs to pay examination fee of Rs.1000 (Rupees one thousand only) online on
every enrollment.
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is there any syllabus or subject on questions will be based for Limited Insolvency Examination,
ReplyDeleteFor Sylabus for IBBI-Limited Insolvency Examination, Please click the following link:
ReplyDeletehttp://iiipicai.in/index.php/examination/syllabus