NCLT ruled that a Resolution Professional cannot be reappointed as Liquidator for the same corporate debtor under Section 34(4) of IBC.
NCLT Bars RP from Acting as Liquidator in Same Case
The National Company Law Tribunal (NCLT) refused to appoint a Resolution Professional (RP) as Liquidator in the same corporate insolvency case, invoking amended Section 34(4) of the Insolvency and Bankruptcy Code (IBC). The provision mandates a cooling-off period and disqualifies RPs from serving as Liquidators for the same corporate debtor unless specific conditions are met.
The tribunal observed that the dual role may compromise neutrality and transparency during liquidation, especially if the RP had previously overseen the resolution process. The bar applies even if the RP acted in good faith, reinforcing institutional safeguards in insolvency proceedings.
The integrity of the liquidation process demands independent oversight, particularly where earlier decisions may impact asset realization, the bench held.
Practitioners must now carefully vet appointments at the liquidation stage. RPs seeking reappointment must demonstrate exceptional circumstances, though precedents suggest such approvals will remain rare to ensure impartiality.