IBBI Suspends Insolvency Professional For 2 Years For Operating CIRP Account After Liquidation Commenced

The Insolvency and Bankruptcy Board of India's (IBBI) Disciplinary Committee has recently suspended the registration of insolvency professional Anil Anchalia for two years for continuing to operate the Corporate Insolvency Resolution Process (CIRP) bank account of Gemus Engineering Limited after the commencement of liquidation.

The CIRP of Gemus Engineering Limited commenced on April 30, 2024 pursuant to an order of the National Company Law Tribunal (NCLT), Kolkata Bench, which appointed Arun Kumar Gupta as the Interim Resolution Professional (IRP). Anchalia was subsequently appointed as the Resolution Professional (RP) on July 18, 2024.

On December 17, 2024, the NCLT ordered liquidation of the corporate debtor and appointed Rashmi Chhawchharia as the liquidator.

The Disciplinary Committee found that even after the cessation of his role as RP, Anchalia continued to operate the CIRP bank account. Bank statements showed transactions continuing up to March 17, 2025, including payments credited to Anchalia and refunds of the initial contribution made by the corporate applicant.

The Committee held that once liquidation commenced, the RP ceased to have authority to operate the corporate debtor's accounts.

“Once the CIRP comes to an end on the liquidation commencement date, the RP ceases to be the RP and all acts in relation to the corporate debtor are required to be undertaken by the liquidator alone. Any other interpretation will lead to duplicity of powers and responsibilities and will lead to confusion about the role to be played by the RP and Liquidator.” the order said.

Emphasising that no residual powers remain with the RP after liquidation begins, the Committee observed that “the RP, therefore, cannot claim any residual or independent authority to act in relation to the affairs or bank accounts of the corporate debtor after commencement of liquidation.”

The committee held that Anchalia's conduct contravened Sections 34(2), 36(2), 36(3) and 208(2)(a) and (e) of the Insolvency and Bankruptcy Code. It also found violations of Regulation 7(2)(a) and (h) of the IBBI (Insolvency Professionals) Regulations, 2016, read with Clauses 3 and 14 of the Code of Conduct for insolvency professionals.

Anchalia defended his actions by arguing that the funds in the CIRP bank account were third party contributions held in trust and therefore excluded from the liquidation estate under Section 36(4) of the Code.

He said the account was operated only to settle pending CIRP costs and to refund advances contributed during the CIRP, and that this was done with the knowledge of the Committee of Creditors and the liquidator.

He also pointed to mitigating factors. According to him, the transactions were carried out in good faith, were transparent, and caused no loss to stakeholders.

The Disciplinary Committee rejected these submissions and held that once liquidation commenced, all authority over the corporate debtor's assets and accounts vested in the liquidator.

Accordingly, the Board suspended Anchalia's registration as an insolvency professional for two years.