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IBBI Suspends Insolvency Professional for Violation of Code of Conduct

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Insolvency and Bankruptcy Board Law Insider

Debangana Ray

Published on June 27, 2022 at 17:50 IST

The disciplinary committee of the Insolvency and Bankruptcy Board of India (IBBI), while deliberating on a show cause notice in the matter of an insolvency professional named Mr. Kedarram Ramratan Laddha suspended him for a period of 1 year.

The reason for the suspension was that he accepted an assignment as an Interim Resolution Professional without having a valid Authorisation for Assignment (AFA) and also while disciplinary proceedings were pending against him.

The IBBI Circular states: “a disciplinary proceeding is considered as pending against an insolvency professional from the time he has been issued a show cause notice by the Insolvency and Bankruptcy Board of India all its disposal by the disciplinary committee;”

“An insolvency professional who has been issued a show cause notice shall not accept any fresh assignment as interim resolution professional, resolution professional, resolution professional, liquidator, or a bankruptcy trustee under the Code.”

The Disciplinary Committee observed that “the Code of Conduct prescribed under Insolvency Professional Regulations mandates the Insolvency Professional Regulations mandates the Insolvency Professional to inform such persons under the IBC as may be required, of a misapprehension or wrongful consideration of a fact of which he becomes aware, as soon as may be practicable and not to conceal any material information or knowingly make a misleading statement to the IBBI, the Adjudicating Authority or any stakeholder, as applicable”.

It was decided that Mr. Kedarram had enough opportunities to disclose the facts before the Adjudicating Authority regarding non-possession of a valid AFA and pendency of disciplinary proceeding against him.

Accordingly, the Disciplinary Committee found the conduct of Mr. Kedarram in accepting the assignment as IRP of the Corporate Debtor without holding valid AFA and during pendency of disciplinary proceedings was in violation of the IBBI Circular No: LA/010/2018 dated 23.04.2018, Section 208(2)(a) and 208(2)(e) of the IBC read with regulation 7A, 7(2)(a) and 7(2)(h) of IP Regulations, Clause 1, 2, 11, 12 and 14 of the Code of Conduct prescribed under IP Regulations.

The disciplinary committee suspended Mr. Kedarram’s registration for a period of one year.