IBBI disciplinary committee cites four-month delay in opening CIRP account

Raman) in the corporate insolvency resolution process of Hallmark Infrastructure Private Limited. It matters to citizens, particularly homebuyers and creditors, as it addresses procedural failures in the valuation of the debtor's assets during the insolvency proceedings.

Who it concerns: The order concerns Shri P.R. Raman (the Insolvency Professional), Hallmark Infrastructure Private Limited (the Corporate Debtor), the Committee of Creditors (including Bank of India and the Authorised Representative of homebuyers), and the IBBI Disciplinary Committee.

What the Board found or ordered

• The Disciplinary Committee found that Shri P.R. Raman failed to appoint registered valuers for the asset class 'Securities or Financial Assets' within the statutory period prescribed under Regulation 27(1) of the CIRP Regulations, 2016.
• The Committee determined that the statutory duty to appoint valuers is not contingent upon the availability of physical assets, supporting documents, or CIRP funds, nor on the RP's assessment of the valuation's utility.
• The Committee rejected Shri P.R. Raman's arguments that the assets were merely book entries, that records were damaged, or that a CoC member requested deferral, stating these do not absolve the RP of the statutory obligation.
• The Committee noted that the issue of valuation was only considered in the 5th CoC meeting on 18.02.2025, which was after the expiry of the statutory deadline (09.10.2024), and no effective follow-up action was taken thereafter.

Also in the document

• The Corporate Debtor had not carried out business operations since 2013, and its books of account for FY 2023-24 were not audited.
• The CIRP account with Bank of India was opened only on 29.12.2024, nearly four months after the commencement of the process, leading to a paucity of funds.
• Shri P.R. Raman claimed that the financial assets reflected in the balance sheets were effectively bad and doubtful debts that had not been written off.
• The Committee observed that the absence of supporting records or the RP's assessment regarding the utility of valuation cannot be treated as a ground for not undertaking the statutory process.