Reimagining Insolvency Outcomes Through the Role of Resolution Professionals
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Behind every insolvency case is a web of people waiting for clarity. Creditors want to know how much they will recover, employees wonder whether their jobs will survive, and vendors are left chasing dues with little certainty. The longer the process takes to move forward, the worse the answers tend to get for all of them.
When a business runs into serious financial trouble, there is rarely a single breaking point. What follows is a slow unravelling. Suppliers start tightening credit terms, employees grow uncertain about their futures, customers begin looking elsewhere, and lenders grow increasingly wary. By the time formal insolvency proceedings begin, much of the damage has already been done. In this context, how quickly and competently the process moves from that point forward matters enormously, not just for the creditors seeking recovery, but for the employees, vendors, and communities tied to the business.
India’s Insolvency and Bankruptcy Code was designed to address this challenge through a structured and time-bound process. Despite a well-defined framework, outcomes continue to vary across cases, placing execution at the core of the insolvency process. This framework relies heavily on the Resolution Professional, whose role influences how outcomes are ultimately delivered.
A Framework Built on Time and Value Discipline
The Insolvency and Bankruptcy Code introduced a defined mechanism to resolve financial distress within a fixed timeline, with the objective of maximising value and balancing the interests of creditors and borrowers. It replaced a fragmented system with a coordinated structure supported by adjudicating authorities, information utilities, and regulatory oversight.
The framework rests on four institutional pillars that include Resolution Professionals, Information Utilities, Adjudicating Authorities, and the Insolvency and Bankruptcy Board of India. Their growth reflects the maturing of India’s insolvency ecosystem. Within this design, Resolution Professionals act as the operational link that connects these institutional elements, ensuring adherence to timelines and maintaining procedural integrity.
Progress in Outcomes with Visible Constraints
The Code has improved recovery outcomes when compared to earlier regimes, indicating that institutional mechanisms are functioning with greater coherence. The framework has also established a clear preference for resolution over liquidation, enabling viable businesses to continue operations while preserving jobs, assets, and economic value. Yet delays arising from litigation and procedural complexities have a direct impact on value erosion. Sectoral patterns reveal that areas such as real estate and MSMEs face recurring stress due to fragmented stakeholder structures and cash-flow constraints, which place additional pressure on the resolution process.
Resolution Professionals as Custodians of the Process
Resolution Professionals hold responsibility for managing the affairs of the corporate debtor during the insolvency process. They take control of operations, preserve assets, verify claims, and coordinate with the committee of creditors to facilitate a resolution plan. In practice, this places them in a position that requires both administrative oversight and business judgment.
They must maintain the entity as a going concern while ensuring that the process remains fair and transparent for all stakeholders. Their role extends to safeguarding stakeholder interests and identifying irregularities, including instances of fraudulent conduct. In effect, the trajectory of a stressed asset is closely shaped by the decisions taken at this stage.
Execution Gaps and the Need for Stronger Capability
The effectiveness of the insolvency process is closely linked to the capability and preparedness of Resolution Professionals. The current framework places significant responsibility on individuals who are required to manage both procedural requirements and operational complexities. This creates pressure, especially in large-scale cases where the scale and nature of business operations demand specialised expertise.
Resolution Professionals undergo a defined qualification process, including the Limited Insolvency Examination, but the study highlights the need for more applied, case-based training and sector-specific expertise to strengthen execution capacity. Instances of delayed actions, limited oversight, and value erosion have highlighted the need for stronger execution standards. For complex cases, a structured approach that separates process supervision from operational management can improve outcomes.
Conclusion
India’s insolvency framework has established a clear direction for resolving financial distress within a defined structure. It has improved recoveries and introduced discipline in dealing with stressed assets. At the same time, the gap between intended outcomes and actual results continues to draw attention.
The framework itself continues to evolve through periodic amendments and committee-led recommendations aimed at improving efficiency and closing process gaps. Resolution Professionals remain central to this equation, as their decisions influence both timelines and value outcomes. Strengthening this layer will determine how consistently the framework delivers value across cases.
Views are personal
The author, Dr Sandeep Goel, is a professor in the area of Accounting and Finance, and Corporate Governance at Management Development Institute (MDI) Gurgaon
