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As per our reports, financial consultancy firm Duff & Phelps has dragged the Insolvency & Bankruptcy Board of India (IBBI) to court, over an order against a senior advisor in its restructuring practice. The Insolvency Regulator, IBBI penalized Vijay Kumar Garg, the Resolution Professional (RP) for Gitanjali Gems, Nakshatra World & other companies which were promoted by Mehul Choksi by passing an order on 8th June 2020.
Choksi was accused of “attempting to siphon-off crores of rupees” from the companies he was managing by the procedure of insolvency. The order accused Vijay Kumar Garg of appointing his company, Duff & Phelps India, as a consultant in contravention of various provisions of the Insolvency & Bankruptcy Code, 2016.
Duff & Phelps filed a petition before the Delhi High Court, challenging the observations made by the IBBI against it. The case filed by Duff & Phelps India is expected to decide the fortune of many corporate insolvency resolution processes under the bankruptcy law, in which the resolution professionals have appointed a third-party consulting firm to carry out its activities.
The question as to whether a resolution professional can appoint third-party consulting firms as per the discretion of the IBBI will be decided by the court, being the Adjudicating Authority. The final decision on this issue will settle the question as to whether an entity, which is not registered as an Insolvency Professional Entity, will be capable of advising or performing the functions & obligations of the RP as per the provisions of the Insolvency & Bankruptcy Code.
It can be concluded that whether a resolution professional is entitled to appoint third-party consulting firms as per the discretion of the IBBI will be decided by the court, being the Adjudicating Authority. The final decision on this matter will settle the question as to whether an entity, not registered as an Insolvency Professional Entity, will be capable of advising or performing the functions & duties of the RP as per the provisions of the IBC.
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