Section 146 of IBC : Section 146: Resignation By Bankruptcy Trustee

Explanation using Example

Imagine a scenario where Mr. A is a bankruptcy trustee handling the insolvency process of XYZ Ltd. Over time, Mr. A decides to retire from his profession as an insolvency professional. Under Section 146(1)(a) of the Insolvency and Bankruptcy Code, 2016, Mr. A is allowed to resign from his position as a bankruptcy trustee due to his intention to cease practicing.

Upon Mr. A's submission of his resignation, the Adjudicating Authority (which could be the National Company Law Tribunal) is required by Section 146(2) to direct the Insolvency and Bankruptcy Board of India (IBBI) to find a replacement for Mr. A within seven days.

Following this, as per Section 146(3), the IBBI has ten days to recommend a new bankruptcy trustee to take over from Mr. A.

Subsequently, under Section 146(4), the Adjudicating Authority must appoint the new trustee recommended by the IBBI within fourteen days of the recommendation.

According to Section 146(5), Mr. A must then hand over the estate of the bankrupt company, XYZ Ltd., to the newly appointed bankruptcy trustee on the date of the new trustee's appointment.

Section 146(6) ensures that Mr. A shares all relevant information with the new trustee and cooperates with them to facilitate a smooth transition of responsibilities.

Finally, as mandated by Section 146(7), the new bankruptcy trustee must notify the committee of creditors and the bankrupt, XYZ Ltd., of his or her appointment within seven days.

Once these steps are completed, Mr. A will be officially released from his duties in accordance with the provisions of Section 148, as stated in Section 146(8).