After the Insolvency and Bankruptcy Code came into effect in August last year, the banks have initiated insolvency proceedings against a number of large defaulting companies. Insolvency Resolution Professionals (IRPs) are the ones who take on the role of acting CEOs on behalf of the lenders and can take big decisions without any legal repercussions.
These professionals are coming under threat of kidnapping or ransom, as they are going about their daily business of settling cases referred to bankruptcy courts. Insurance companies are aware of the huge potential that insurance for IRPs has in the Indian market, with a total of 1,200 insolvency professionals in the market and a vast amount of bad debt going for resolution.
Insurance companies are in the process of coming up with new policies that will not only offer professional indemnity to insolvency professionals, but will also provide coverage against kidnap and ransom scenarios. An IRP named Devendra Jain, was kidnapped by a group of investors, but was later saved by the Mumbai Police. He says that the problems facing the IRPs have been discussed with the Insolvency and Bankruptcy Board of India, and also with Insurance Institute of India, who are already in the process of designing a safety policy for IRPs.
Since the implementation of the Insolvency and Bankruptcy Code last year, the Reserve Bank of India (RBI) has started putting pressure on banks to tackle the problem of stressed loans that are estimated at ₹11.5 lakh crore, according to rating agency CRISIL.
*Source: Economic Times
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