I’ve been talking about insolvency and bankruptcy as lucrative practice areas, but how much can an insolvency professional (IP) in India make, exactly?
The minimum fee payable to an IP starts from INR 1 lakh per month as per the Insolvency and Bankruptcy Board of India’s (IBBI) (Insolvency Professionals) Regulations, 2016.
Note that this is not a full-time job, and you could be dealing with insolvencies in multiple companies. An insolvency typically takes 9 to 11 months, but can take longer.
This is applicable for insolvencies of up to INR 50 crore. For insolvencies above INR 10,000 crore, the minimum fee is INR 5 lakh per month.
However, many established resolution professionals with a track record may charge higher fees.
There are two categories of incentives as well:
- An incentive of about 0.5-1 percent of the total amount payable to creditors for early resolution
- A second incentive based on value maximisation of 1 percent of the amount in excess of the liquidation value of the company
Imagine getting 1 percent of an INR 500 crore insolvency resolution!
There is no specified limit on how many insolvencies you can work on simultaneously, but the Code of Conduct states that you should not take up more work than you can handle as an IP.
But if you have a firm that is registered as an insolvency professional entity (IPE), you can work on many more.
If you work on two insolvencies of smaller companies, let’s say about INR 100 crore each, you can earn up to INR 2 lakh per month, and you could get a performance-linked incentive of 0.5 percent or INR 1 crore if you resolve in under 11 months!
I have not even taken into account the second incentive – which will be payable if the value of the company is higher than the liquidation value!
Isn’t that amazing?
Are you a little more interested in becoming an IP?
Here is a detailed working with calculations, screenshots and an example.
And here is a slightly older article from the Economic Times talking about the rising market for insolvency professionals, one which has now grown even bigger.
Also, upon being appointed as an insolvency practitioner before the NCLT and taking on new functions you might find yourself:
- Running businesses
- Scouting and negotiating deals
- Investigating and advising on the viability of a business (and, sometimes, the integrity of its directors)
- Business restructuring
This could be a monumental shift in the right direction for you. Especially if you have dreams of breaking into the corporate C-suite some day!
Want to fast track your way to becoming a CEO or COO?
Working on insolvencies is a great way to pick up relevant skills and create a track record, especially for the banking and finance industry (think NBFCs and fintech startups) and also build the right network.
What are the other benefits of becoming an IP?
Apart from the pay, here are a few perks that make this area of work very attractive to mid-career professionals, lawyers, accountants, CS and others:
- You get the satisfaction of rescuing an increasing number of jobs and businesses, contributing to the Indian economy while supporting the banking and finance system of the country. You can get work and referrals from your existing, long standing clients.
- You get to work with top professionals – CEOs, CFOs, investment bankers, top corporate lawyers and deal makers – basically the movers and shakers of corporate India, and they need to convince you about what is in the best interest of the insolvent business
- Insolvency is temporary but bankruptcy is permanent. Can you prevent an insolvent company from going bankrupt? Can you prevent massive funds from public sector banks and other financial institutions from going down the drain? A lot depends on the IP!
- This new area of work has opened a new horizon for a lot of CA, cost accountants, CS and lawyers who were facing stagnation in their careers – they now have a brand new area to expand into
- If you do not want to restrict yourself to finance, taxation or compliance, but want to expand your expertise to management, corporate restructuring, crisis management and deal-making, this is a fabulous starting point. What other exciting opportunities and career growth can such skill sets and networks lead to a few years down the line?
So there you are. All this can be yours if you follow just a few basic steps.
What steps? To find out come to our FREE, LIVE, online bootcamp on ‘How to become an insolvency professional in India’,on May 6-7, 2023, from 6.00-9.00 pm IST both days.
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