Competition, new rules crimp resolution professionals’ fees
NEW DELHI : Average fees charged by resolution professionals (RPs) and other consultants involved in insolvency and bankruptcy have declined by as much 70% during the past two years due to competition among professionals and tightening of rules by regulators, market participants said. Back in 2017, when the Reserve Bank of India (RBI) published the ‘dirty dozen’ list of 12 large accounts against which the newly introduced Insolvency and Bankruptcy Code (IBC) would be used, the consultants were charging as much as ₹1-2 crore for each case.
Six years later, the fees have come down to as low as ₹10-15 lakh per case, market participants said, requesting anonymity. This drastic reduction in the fee payable for insolvency professionals is on account of increasing competition and tightening of rules by the regulators.
Additionally, lenders who are primary stakeholders in IBC have also started to be more conscious of paying hefty fees, experts said. According to Insolvency and Bankruptcy Board of India (IBBI) data, there are currently 4,273 insolvency professionals in the country.
“The fees have drastically been rationalized in IBC mandates, especially fees involving consultants and resolution professionals. Another key reason being that the lenders have become more conscious of expenditure from corpus of corporate debtor on account of their fiduciary responsibility vis-à-vis the other stakeholders," said Siddharth Srivastava, partner, Khaitan & Co.
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