Interim Resolution Professional (IRP)

An Interim Resolution Professional (IRP) is a key institutional functionary appointed during the initial phase of the Corporate Insolvency Resolution Process (CIRP) under India’s insolvency framework. The IRP plays a pivotal role in taking control of the corporate debtor, preserving its value, and facilitating a time-bound resolution of financial distress. In the context of banking, finance, and the Indian economy, the IRP mechanism has strengthened creditor rights, improved recovery outcomes, and enhanced overall financial discipline.

Concept and Legal Basis of the Interim Resolution Professional

The role of the Interim Resolution Professional is defined under the Insolvency and Bankruptcy Code, enacted to consolidate and amend laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms, and individuals. The IRP is appointed by the adjudicating authority at the commencement of the insolvency process, typically for an initial period of 30 days.
The objective of appointing an IRP is to ensure an independent, professional, and creditor-neutral management of the corporate debtor during the early stages of insolvency proceedings. This prevents further erosion of asset value and protects the interests of all stakeholders.

Appointment and Tenure of the IRP

The IRP is appointed by the National Company Law Tribunal (NCLT) upon admission of an insolvency application filed by a financial creditor, operational creditor, or the corporate debtor itself. The appointment is generally based on the recommendation of the applicant creditor or from a panel maintained by the insolvency regulator.
The tenure of the IRP is temporary and lasts until:

• The Committee of Creditors (CoC) confirms the IRP as the Resolution Professional, or
• A new Resolution Professional is appointed by the CoC.

This transitional role ensures continuity and stability at a critical stage of the insolvency process.

Powers and Functions of the Interim Resolution Professional

The IRP assumes extensive powers and responsibilities to manage the affairs of the corporate debtor as a going concern. These include:

• Taking control and custody of the assets and records of the corporate debtor.
• Collecting and verifying claims of creditors.
• Constituting the Committee of Creditors based on verified claims.
• Managing day-to-day operations of the corporate debtor.
• Ensuring compliance with legal and regulatory requirements.

The powers of the board of directors are suspended during this period and vest in the IRP, ensuring professional management free from conflicts of interest.

Role in Banking and Financial Sector

For banks and financial institutions, the IRP serves as a critical link in the recovery and resolution process. By assuming control of the distressed entity, the IRP ensures transparency in asset valuation and claim verification.
The IRP helps banks by:

• Preventing diversion or dissipation of assets.
• Providing accurate financial information for decision-making.
• Facilitating collective action through the Committee of Creditors.

This structured process reduces uncertainty and improves recovery prospects compared to earlier debt recovery mechanisms.

Interim Resolution Professional and the Committee of Creditors

One of the most important functions of the IRP is the constitution of the Committee of Creditors, which comprises financial creditors of the corporate debtor. The CoC is the primary decision-making body in the insolvency process and determines the future course of resolution.
The IRP acts as a facilitator for the CoC, convening meetings, presenting information, and implementing its decisions. Although the IRP does not have voting rights in the committee, the role is crucial in ensuring informed and timely decisions.

Regulatory Oversight and Professional Standards

Interim Resolution Professionals are registered and regulated by the Insolvency and Bankruptcy Board of India. They are required to meet eligibility criteria, follow a strict code of conduct, and adhere to professional standards.
Regulatory oversight ensures:

• Independence and integrity of insolvency professionals.
• Accountability for misconduct or negligence.
• Uniformity and transparency in insolvency proceedings.

This professionalisation has enhanced confidence in India’s insolvency framework.

Importance for the Indian Economy

The IRP mechanism has contributed significantly to improving India’s ease of doing business and credit culture. By enabling time-bound resolution of stressed assets, it has reduced the accumulation of non-performing assets in the banking system.
Efficient insolvency resolution:

• Frees up locked capital for productive use.
• Improves credit availability and investor confidence.
• Encourages responsible borrowing and lending behaviour.