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Jul 05, 2017

The rising league of insolvency professionals

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India's incipient battle against bankruptcy is spawning new ideas - and career options. After India enacted tougher laws to deal with sticky loans and the central bank stepped in accelerate the pace of recoveries, finance executives have stumbled upon a career-growth opportunity based, ironically, on insolvency.

Independent insolvency professionals (IPs), are becoming critical for the success of a Rs 8-lakh crore recovery initiative. The Insolvency and Banking Board of India (IBBI), set up last autumn and tasked with providing the framework for recovery proceedings, conducts exams that allow chartered accountants, company secretaries, cost accountants, and advocates to qualify as IPs.

Nagpur-based Arnab Basu, a cost accountant, wants to take the national test so that his 10+year corporate career, facing a mid-life stagnation, gets a boost.

Kolkata-based Rajarshi Ghosh, a middle-aged accountancy professional, is also preparing for the insolvency examination. "In my city , job opportunities are limited but I need to grow in my career. Insolvency is one area to explore," Ghosh said.

Chartered and cost accountants, company secretaries, and lawyers with a minimum of 10 years of post-qualification experience may be eligible to be appointed as IPs. The IBBI has registered 396 IPs who have cleared their qualifying exams. There are 1,000 unregistered IPs. Former compa ny CEOs, MDs, CGMs are also in the queue to qualify as IPs, which is seen as a crucial link in ensuring that competing claims from stakeholders are settled and funds made available for productive sectors of the economy.

Not the cushiest job

The role of IPs comes with its own set of challenges. "Insolvency is the most promising, but an equally challenging career," said Vinod Kothari, an insolvency practitioner from Kolkata.

"In many cases, borrowers do not cooperate while sharing the details, and creditors insist on fast-track processing.You have to manage everything, using all resources," Kothari said. "Your qualification matters, but your experience helps you navigate the situation."

The primary objective of an IP is to find a resolution plan.The professionals can act in two ways: Interim Resolution Professional, who are appointed by the borrower for the first 30 days of pro ceedings at the National Company Law Board; and Resolution Professionals, who are usually appointed by the committee of creditors for the next 150-240 days of the stipulated period.

"Insolvency professionals should first have huge convincing powers to deal with creditors," said Pavan Kumar Vijay, founder of Corporate Professionals that employs IPs. "They need to deal with warring financial creditors and tell them clearly that they are gathering to draw up a resolution plan. An IP should be a mix bag of management, financial and legal skills while she must have knowledge of business and innovative ideas." Sanjay Grover, a CA and CS who has a 20-member team for his newly-launched Delhi firm called Ensemble Resolution Professionals, said the scope for such profes sionals would only increase as more bad loans come up for resolution."Initially, when this law came into effect in December, we were given six months to do some work and we resolved the matter and recovered Rs 28 crore for a client," said Grover. "Now, I too plan to give the online test and become a full-time IP because there are lots of small cases where they will require professionals under the new law."

Complexity and cash

"The initial fee structure for individual "The initial fee structure for individual insolvency professionals like us was subdued. But it will increase once you prove your mettle," said Navneet Gupta, an insolvency professional, who claims he was the first chartered accountant to clear the IBBI exam in the country .

IRPs and RPs (Interim Resolution Professionals and Resolution Professionals), collectively called IPs, can earn Rs 2 to Rs 15 lakh, depending on the size of business and debts of cases, professionals said. For cases between operational creditors and companies, income opportunities are in the range of Rs 50,000 to Rs 1,50,000 a month as the nature of the cases are less complex.