IBBI penalises insolvency professional for charging ₹5 lakh monthly fee

It matters to citizens as it establishes regulatory standards for how Resolution Professionals must handle fees and approvals in corporate insolvency cases.

Who it concerns: The order concerns Shri Sanjay Bulakichand Borad (the Insolvency Professional), the Insolvency and Bankruptcy Board of India (the regulator), and the stakeholders in the Corporate Insolvency Resolution Process (CIRP) of Golden Tobacco Limited, including the Committee of Creditors (CoC) and the Adjudicating Authority (NCLT).

What the Board found or ordered

• The Disciplinary Committee (DC) found that Shri Sanjay Bulakichand Borad contravened Sections 208(2)(a) and (e) of the Insolvency and Bankruptcy Code, 2016, and Regulation 34B(2) of the CIRP Regulations.
• The DC determined that the IP charged a fee of Rs. 5 Lakh per month, which exceeded the prescribed minimum of Rs. 3 Lakh per month for the relevant claim category (Rs. 500 crore to Rs. 2,500 crore).
• The DC held that under Regulation 34B(2), any fee higher than the prescribed minimum requires prior approval and recorded reasons from the Committee of Creditors (CoC), which the IP failed to obtain.
• The DC rejected the IP's argument that he was entitled to the higher fee because it had been approved for the previous Resolution Professional, stating that such approval does not automatically transfer to a successor.
• The DC acknowledged that court orders (from NCLT and NCLAT) prevented CoC meetings, but ruled this did not excuse the IP from the requirement to seek prior approval for enhanced fees.

Also in the document

• The IP had not drawn any fee for more than nine months after his appointment until an NCLAT order in January 2025.
• The IP had filed an undertaking with the NCLAT to refund the fee if not approved by the reconstituted CoC.
• The total admitted claims in the case were approximately Rs. 1,556 crore.