Section 98: Replacement of Resolution Professional

Section 98 of the Insolvency and Bankruptcy Code, 2016 provides the procedure for replacing a resolution professional appointed under Section 97 during an individual insolvency resolution process.

Current framework: The notified Part III insolvency resolution framework applies to personal guarantors to corporate debtors. The IBBI Insolvency Resolution Process for Personal Guarantors to Corporate Debtors Regulations, 2019 have been amended through 2026 and operate alongside the Code.

Section 98 - Statutory Provision

(1) Where the debtor or the creditor is of the opinion that the resolution professional appointed under section 97 is required to be replaced, he may apply to the Adjudicating Authority for the replacement of such resolution professional.

(2) The Adjudicating Authority shall within seven days of the receipt of the application under sub-section (1) make a reference to the Board for replacement of the resolution professional.

(3) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (2), recommend the name of the resolution professional to the Adjudicating Authority against whom no disciplinary proceedings are pending.

(4) Without prejudice to the provisions contained in sub-section (1), the creditors may apply to the Adjudicating Authority for replacement of the resolution professional where it has been decided in the meeting of the creditors, to replace the resolution professional with a new resolution professional for implementation of the repayment plan.

(5) Where the Adjudicating Authority admits an application made under sub-section (1) or sub-section (4), it shall direct the Board to confirm that there are no disciplinary proceedings pending against the proposed resolution professional.

(6) The Board shall send a communication within ten days of receipt of the direction under sub-section (5) either-

(a) confirming appointment of the nominated resolution professional; or

(b) rejecting appointment of the nominated resolution professional and recommend a new resolution professional.

(7) On the basis of the communication of the Board under sub-section (3) or sub-section (6), the Adjudicating Authority shall pass an order appointing a new resolution professional.

(8) The Adjudicating Authority may give directions to the resolution professional replaced under sub-section (7)-

(a) to share all information with the new resolution professional in respect of the insolvency resolution process; and

(b) to co-operate with the new resolution professional in such matters as may be required.

Who May Seek Replacement?

Under Section 98(1), either the debtor or a creditor may apply to the Adjudicating Authority when that person considers that the resolution professional appointed under Section 97 should be replaced.

Replacement at the Decision of Creditors

Section 98(4) separately permits creditors to seek replacement where a meeting of creditors has decided to replace the resolution professional with a new professional for implementation of the repayment plan. This mechanism operates without prejudice to the general replacement right in Section 98(1).

Role of the Adjudicating Authority and IBBI

The Adjudicating Authority makes the statutory reference or direction to the Insolvency and Bankruptcy Board of India. The Board recommends or confirms a resolution professional in accordance with Section 98, including the requirement concerning pending disciplinary proceedings. The Adjudicating Authority then passes the appointment order.

Statutory Timelines

Section 98 specifies a seven-day period for the Adjudicating Authority to make a reference to the Board after receiving an application under subsection (1). It also specifies ten-day periods for the Board's recommendation under subsection (3) and communication under subsection (6), as applicable.

Handover and Cooperation by Replaced Resolution Professional

Section 98(8) enables the Adjudicating Authority to direct the outgoing resolution professional to share all information concerning the insolvency resolution process with the newly appointed professional and to cooperate in matters that may be required. This supports continuity of the proceeding after replacement.

Meaning of Important Terms

Resolution professional: Section 79 defines the resolution professional for Part III as an insolvency professional appointed under that Part for conducting the fresh start process or insolvency resolution process.

Board: The Board means the Insolvency and Bankruptcy Board of India established under Section 188 of the Code.

Creditor: Section 3 defines a creditor as a person to whom a debt is owed and includes financial creditors, operational creditors, secured creditors, unsecured creditors and decree-holders.

Repayment plan: Under Part III, the repayment plan is the proposal considered through the statutory insolvency resolution process for restructuring or resolving the debtor's debts in accordance with the Code and applicable regulations.

Adjudicating Authority: For personal guarantors to corporate debtors, jurisdiction is governed by Section 60 of the Code together with the notified Part III framework.

Related Provisions

For a particular proceeding, check the official Code, current commencement notifications, applicable rules, the latest IBBI regulations and relevant orders or judgments.