Section 147: Vacancy in Office of Bankruptcy Trustee under IBC 2016
Section 147 of the Insolvency and Bankruptcy Code, 2016 provides the procedure for filling a vacancy in the office of a bankruptcy trustee where the vacancy arises for a reason other than replacement under Section 145 or resignation under Section 146.
Section 147 - Vacancy in office of bankruptcy trustee
(1) If a vacancy occurs in the office of the bankruptcy trustee for any reason other than replacement or resignation, the vacancy shall be filled in accordance with this section.
(2) On occurrence of such vacancy, the Adjudicating Authority shall direct the Board for replacement of a bankruptcy trustee.
(3) The Board shall, within ten days of the direction of the Adjudicating Authority, recommend a bankruptcy trustee as replacement.
(4) The Adjudicating Authority shall appoint the bankruptcy trustee recommended by the Board within fourteen days of receiving the recommendation.
(5) The earlier bankruptcy trustee shall deliver possession of the estate of the bankrupt to the newly appointed bankruptcy trustee on the date of appointment.
(6) The Adjudicating Authority may direct the bankruptcy trustee who has vacated office to share all information with the new trustee in respect of the bankruptcy and to co-operate with the new trustee as required.
(7) The newly appointed bankruptcy trustee shall give notice of the appointment to the committee of creditors and the bankrupt within seven days of appointment.
(8) The earlier bankruptcy trustee shall be released in accordance with Section 148.
Proviso: Section 147 does not apply where the vacancy has occurred due to temporary illness or temporary leave of the bankruptcy trustee.
When does Section 147 apply?
Section 147 applies where the office of bankruptcy trustee becomes vacant for a reason other than the statutory replacement procedure under Section 145 or resignation under Section 146. The proviso expressly excludes temporary illness and temporary leave.
Role of the Adjudicating Authority and the Board
The Adjudicating Authority initiates the replacement process by directing the Insolvency and Bankruptcy Board of India to recommend a bankruptcy trustee. The Board must make its recommendation within ten days, and the Adjudicating Authority must appoint the recommended trustee within fourteen days of receiving that recommendation.
Transfer of the bankruptcy estate
The earlier trustee is required to deliver possession of the bankrupt's estate to the replacement trustee on the date of the new appointment. This provision is intended to maintain continuity in administration of the bankruptcy estate.
Information sharing and co-operation
The Adjudicating Authority may direct the trustee who vacated office to share relevant information with the new bankruptcy trustee and to co-operate in matters required for the bankruptcy process.
Notice of appointment
The replacement trustee must give notice of the appointment to both the committee of creditors and the bankrupt within seven days of appointment.
Release under Section 148
The earlier bankruptcy trustee is released in accordance with Section 148. Section 148 connects release from office with appointment of a new trustee following replacement, resignation or a vacancy.
Related provisions
Section 147 should be read with Section 145 - Replacement of bankruptcy trustee, Section 146 - Resignation by bankruptcy trustee, Section 148 - Release of bankruptcy trustee, and Section 149 - Functions of bankruptcy trustee.