CHALLENGES FACED BY INSOLVENCY PROFESSIONALS IN CONDUCTING CIRP

AUTHOR – TANISHQ JOSHI, STUDENT AT UNITEDWORLD SCHOOL OF LAW

BEST CITATION – TANISHQ JOSHI, CHALLENGES FACED BY INSOLVENCY PROFESSIONALS IN CONDUCTING CIRP, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (4) OF 2025, PG. 684-691, APIS – 3920 – 0001 & ISSN – 2583-2344.

Introduction

The Corporate Insolvency Resolution Process (CIRP) within the framework of the Insolvency and Bankruptcy Code (IBC) of 2016 was designed with a creditor-focused insolvency resolution approach. It constituted a radical shift from the ineffective and obsolete insolvency systems of the past by placing insolvency professionals (IPs) at the centrepiece of the resolution. An IP’s role is intricate as it encompasses the management of the distressed corporate debtors, protecting the creditors, arranging legal compliance, and enabling the resolution plan in the best possible manner to reduce scope for misuse and create transparency.

Even with the framework of the IBC in place, put into action, the CIRP comes with significant hurdles. In practice, there are problems with the sponsors (inertia, lack of cooperation), the creditors (differing opinions), and operational problems that often block processes that need to happen for the resolution of insolvency. Furthermore, regulatory formality along with boundary conflict among several bodies adds legal ambiguity and procrastination. The ethical question coupled with the conflict of interests makes the role of an IP more complex and creates scope for poor judgment and acts of malpractice. In addition to all these, there is certainly too much litigation through the courts which causes delays. Supervision and constant control from courts and appeal courts is also another insolvency hurdles for the over dependency on the courts to bring any resolution. This chapter explores the major challenges faced by insolvency professionals in conducting CIRP, focusing on practical difficulties, regulatory hurdles, ethical concerns, and judicial oversight. Understanding these issues is crucial to enhancing the effectiveness of the IBC framework and ensuring that CIRP remains a viable mechanism for corporate revival and debt recovery.