CHAPTER II - CORPORATE INSOLVENCY RESOLUTION PROCESS
Section 22 of the Insolvency and Bankruptcy Code 2016: Appointment of Resolution Professional
Section 22 governs the Committee of Creditors' decision at its first meeting on who will act as the resolution professional. The CoC may continue the interim resolution professional as the resolution professional or propose another insolvency professional, subject to the voting, consent and confirmation procedure prescribed by the Code.
Section 22(1): First Meeting of the Committee of Creditors
The first meeting of the Committee of Creditors must be held within seven days of constitution of the CoC.
The CoC is constituted under Section 21 after the interim resolution professional carries out the claims and financial-position functions contemplated by the Code.
Section 22(2): Appointment Decision by 66 Percent Voting Share
At its first meeting, the CoC may, by a majority vote of not less than 66 percent of the voting share of financial creditors, choose between two alternatives:
The 66 percent requirement in Section 22(2) is a specific voting threshold and therefore applies instead of the general CoC voting rule for ordinary decisions under Section 21(8).
Section 22(3)(a): Continuing the Interim Resolution Professional
If the CoC resolves to continue the interim resolution professional as the resolution professional, the decision is subject to written consent from the IRP in the specified form. The CoC communicates its decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority.
The CIRP Regulations prescribe the relevant form for written consent of an insolvency professional to act as resolution professional. The current prescribed form and filing requirements should be checked in the latest IBBI regulations and circulars when making an appointment.
Section 22(3)(b): Replacing the Interim Resolution Professional
If the CoC decides to replace the IRP, it files an application before the Adjudicating Authority seeking appointment of the proposed resolution professional. The application must be accompanied by written consent from the proposed resolution professional in the specified form.
Section 22(4): Confirmation by the Insolvency and Bankruptcy Board of India
Where a replacement is proposed under Section 22(3)(b), the Adjudicating Authority forwards the name of the proposed resolution professional to the Insolvency and Bankruptcy Board of India for confirmation and makes the appointment after confirmation by the Board.
Section 22(5): If IBBI Does Not Confirm Within Ten Days
If the Board does not confirm the proposed resolution professional within ten days after receiving the name, the Adjudicating Authority directs the interim resolution professional to continue functioning as the resolution professional until the Board confirms appointment of the proposed resolution professional.
Role of the Resolution Professional After Appointment
Once appointed, the resolution professional conducts the corporate insolvency resolution process and manages the operations of the corporate debtor in accordance with Section 23. The resolution professional also performs the duties prescribed by Section 25 and remains subject to the CoC approval requirements applicable to specified actions under Section 28.
Replacement After Appointment Under Section 22
Section 22 concerns the initial appointment decision at the first CoC meeting. If the CoC later decides during CIRP that the resolution professional appointed under Section 22 should be replaced, the separate procedure under Section 27 applies.
Definitions Relevant to Section 22
| Provision | Term | Meaning |
|---|---|---|
| Section 3(8) | Corporate debtor | A corporate person who owes a debt to any person. |
| Section 5(1) | Adjudicating Authority | For the purposes of Part II, the National Company Law Tribunal constituted under the Companies Act, 2013. |
| Section 5(7) | Financial creditor | A person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred. |
| Section 5 | Interim resolution professional | An insolvency professional appointed under Section 16; the current consolidated Section 5 should be consulted for applicable clause numbering. |
| Section 5(27) | Resolution professional | An insolvency professional appointed to conduct CIRP and includes an interim resolution professional. |
| Section 5(28) | Voting share | The share of voting rights of a financial creditor in the CoC calculated in accordance with the financial debt owed to eligible voting members under the Code. |
Section 22 Procedure at a Glance
| Stage | Requirement |
|---|---|
| First CoC meeting | Within seven days of constitution of the CoC. |
| CoC decision | Not less than 66 percent voting share. |
| Continue IRP | Written consent in specified form and communication to IRP, corporate debtor and Adjudicating Authority. |
| Replace IRP | Application to Adjudicating Authority with written consent of proposed RP. |
| Board confirmation | Adjudicating Authority forwards the proposed RP's name to IBBI for confirmation. |
| No confirmation within ten days | IRP continues as RP until confirmation of the proposed appointment. |
Official Legal Resources
For the current Code and CIRP framework, refer to the India Code portal, IBBI Legal Framework, IBBI Acts, IBBI Regulations, IBBI Notifications and IBBI Orders.