IBBI Suspends Insolvency Professional's AFA For Six Months Over CIRP Without Valid Authorisation

The Insolvency and Bankruptcy Board of India (IBBI) on 19 February suspended the Authorisation for Assignment (AFA) of insolvency professional Bhim Sain Goyal for six months after finding that he undertook a Corporate Insolvency Resolution Process (CIRP) assignment without holding a valid authorisation.

The matter arose from the CIRP of Suich Industries Limited, admitted by the NCLT, New Delhi Bench‑V on 19 November 2024. Goyal was appointed as the Interim Resolution Professional (IRP) through an interlocutory application, and the NCLT directed him to file a valid AFA within five working days.

Goyal's existing AFA had expired on 8 November 2024, and renewal was still pending. Despite this, he issued a public announcement on 22 November 2024, thereby commencing the CIRP without a valid authorisation.

The IBBI received a complaint and issued a show-cause notice. In his reply, Goyal admitted that he acted under the mistaken belief that a grace period existed and that his AFA would be valid till 31 December 2024 once renewed. He also argued that he issued the announcement to avoid any delay in CIRP and did not receive any financial benefit, as the operational creditor had not paid the directed fee. He further stated that he had filed for withdrawal from the assignment once advised by his Insolvency Professional Agency.

The Disciplinary Committee (DC) noted that Regulation 7A of the IBBI (Insolvency Professional) Regulations, 2016, clearly prohibits acceptance of assignments without a valid AFA. The DC observed:

“The above regulation provided that the AFA renewed by the IPA after the insertion of the above provision shall be valid till 30th of June of the year where the expiry of the period of one year falls from 1st of January to 30th of June, or till 31st of December of the year where the expiry of the period of one year falls from 1st of July to 31st of December. The above provision has prospective application and hence it will not be applicable to the AFA issued or renewed by IPA, prior to the date of the notification of the said Regulation, i.e. 30.01.2024.”

The DC further found that Goyal failed to comply with the directions of the NCLT to file a valid AFA within five working days.

Accordingly, exercising powers under Section 220 of the Insolvency and Bankruptcy Code, read with Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017, the DC ordered suspension of his AFA for six months, effective 30 days from the order date. Copies of the order are to be sent to all CoCs or Stakeholders' Consultation Committees, to his IPA, and to the NCLT Principal Bench for information.