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Insolvency Professionals: IBBI Proposes Changes to the Code of Conduct

The Insolvency and Bankruptcy Board of India (IBBI) has released two discussion papers proposing changes to the IBBI (Insolvency Professionals) Regulations, 2016. Public comments are invited until September 1, 2025.[1]

Key proposals include:

  • Cap on number of assignments: One of the key proposals is to extend the existing ceiling of ten assignments for resolution professionals to also include assignments undertaken in the capacity of interim resolution professional and liquidator. Within this cap, no more than three assignments may involve admitted claims exceeding ₹1,000 crore. Insolvency professionals who are already handling ten or more such assignments—whether as resolution professional, interim resolution professional, or liquidator—at the time the revised framework takes effect will not be eligible to accept any new assignment until their ongoing assignments fall below the prescribed limit.

At present, there is no specific cap on the number of assignments an insolvency professional may undertake, and the only express cap applies to assignments as resolution professional in CIRPs. Clause 22 of the Code of Conduct merely states that  insolvency professionals should refrain from accepting too many assignments, if they are unlikely to be able to devote adequate time to each of the assignments.

The proposal now seeks to delete Clause 22 and its clarification, and to introduce a new Regulation 7B.

  • Removal of duplicate provision on acquisition of debtor assets: This proposal relates to the removal of duplication within the Code of Conduct. Clause 6, which is proposed to be deleted, currently provides that in cases where the insolvency professional is dealing with assets of a debtor during liquidation or bankruptcy process, he must ensure that he or his relatives do not knowingly acquire any such assets, whether directly or indirectly unless it is shown that there was no impairment of objectivity, independence or impartiality in the liquidation or bankruptcy process and the approval of the Board has been obtained in the matter.

Even after this clause is deleted, the prohibition will remain in force through the existing regulations.

In addition, the Board has amended the 2019 guidelines on continuing professional education (CPE) for insolvency professionals. The revised framework inter alia introduces a requirement that a minimum percentage of the total CPE credits must be obtained through in-person programs.

As to the new Bill introduced in the Lok Sabha on August 12, 2025, to amend the Insolvency and Bankruptcy Code, 2016, we will be sharing a detailed post in the coming days.

[1] IBBI’s discussion papers can be accessed here and here.