As a lawyer, CA, cost accountant, CS, banker or experienced management professional looking for the next big market opportunity, have you considered the area of insolvency resolution?
More specifically, have you considered an unbeatable, recession-proof career as an insolvency professional (IP)?
India currently has nearly 2 million practicing lawyers, more than 350,000 CA, more than 65,000 members of the Institute of Company Secretaries of India, and easily over 10 million management professionals with at least 10 years’ experience.
In contrast, as of 2022, the country has a total of around 1000 registered IPs, and the need is growing exponentially every day.
The COVID pandemic has further aggravated the problem, with thousands of companies pushed into insolvency owing to the economic downturn. A looming global recession and VC/PE funding drying up since the last 6 months has not helped the situation much.
While India is not expected to go into a recession, many major global economies may go into a recession over the next few months, which will only drive up the demand for insolvency professionals.
Such a shortage of IPs can lead to delays in insolvency proceedings and a backlog of cases, which can be detrimental to the economy because it has the potential to damage investor confidence. The delays can also have a negative impact on companies undergoing insolvency proceedings, causing further damage to their financial position.
Let’s look at some more statistics. This Economic Times article from March 2023 quotes data from the Insolvency and Bankruptcy Board of India (IBBI) to show that only 15 percent of the 267 insolvency cases admitted in company law tribunals during October-December 2022 reached resolution, with overall recovery of just 27 percent of the claimed amount.
What’s more, one-third of all liquidations happened because no resolution plans were received.
This is a classic example of high demand and low supply, and it is an area that will continue to open up high-income opportunities in the long term.
In fact, so great is the demand that since September 2022, IBBI has allowed IPEs to act as insolvency professionals in order to speed up the resolution process. Before this, only individuals were permitted to register as IPs under the Insolvency and Bankruptcy Code (IBC) 2016.
The field is wide open
What do senior lawyers/ CA/ CS or management professionals normally do to indicate that they are successful in their careers?
Hire a nice, fancy chamber or office in a prime location, or hire lots of juniors, or even buy a luxury car to impress clients?
But there are far better ways to stand out.
Qualifying as an insolvency professional really helps you to stand out, especially if you want to work with the banking and finance industry or want to have banks, NBFCs and fintechs as your client.
Instead of acquiring fancy cars or chambers, acquire a solid set of skills and rare qualifications that will speak for themselves.
Imagine becoming the saviour of companies that find themselves in tough times, unable to pay their debts, and you get to play god, appointed by court and creditors, backed by powerful legislation like the IBC.
In the process, you make good money, get to work with the upper echelons of corporate India, build an incredible professional network, and eventually pave the way to becoming an Independent Director on boards of public companies.
Who is an IP? A hero!
Insolvency resolution as a profession was envisaged by the IBC, following the near-collapse of India’s banking system in 2015 thanks to huge corporate defaulters who had not repaid their loans.
They had taken advantage of our extremely slow legal system to delay payments and liabilities for years and years. Many companies were insolvent or bankrupt, but the insolvency process was a mess, and banks and NBFCs were bleeding.
The government decided that the economy couldn’t move forward without a new law to tackle the situation. So a powerful new tribunal, the NCLT, was created with many benches all over the country, and given a deadline to clear the backlog.
But who was to take charge of these companies undergoing insolvency or bankruptcy? Who would hold the fort while the board of directors of the debtor company was removed? Who would keep things running?
There was no readymade pool of professionals to handle the situation and preserve the value of assets while insolvency was resolved or bankruptcy was dealt with and a company was liquidated.
Overnight, India had to find the heroes who would save companies that had gone into insolvency and protect financial as well as operations creditors.
Legislators and policy makers envisaged that lawyers, CA/CMA and CS, along with experienced corporate professionals would be given an opportunity to become insolvency professionals.
Can you be an IP?
How will the government know whether you are the right person to resolve insolvency disputes?
Simple answer, you need to clear the IBBI’s Limited Insolvency Exam, which tests your knowledge of law, procedure and propriety.
The IBBI has been given the responsibility to hold this exam, and act as a gatekeeper so that the right professionals join the rank of IPs.
In an initial burst of enthusiasm, sensing a great opportunity, top law firm partners, CA, CS and finance professionals had begun qualifying as ips.
For example, Ajay Bahl, name partner at AZB & Partners is an IP, as is Cyril Shroff of Cyril Amarchand Mangaldas.
But while the signalling effect of being an IP is considerable, these top professionals do not actively resolve insolvencies because they have large law firms to run. Over time, many similar well known professionals have lost interest in this market.
Which has created a massive opportunity for lawyers, CA, CS and other professionals with either a background or an interest in banking and finance.
The day you become an IP, you stand out for your clients. It sends out the signal that you have cleared a difficult exam that enables you to be engaged in the highly complex, prestigious and challenging work of resolving insolvency and bankruptcy of large companies.
Once you work as an IP to actively resolve a few insolvencies, you become a proven entity in the market, making it easy for high-value clients to think of you as a good lawyer/ CA/ CS/ banker/ director who they should engage.
Even if you are not appointed by the NCLT to officially resolve insolvencies, you will enjoy greater respect and importance in business negotiations.
People who are far more senior to you will take your views very seriously in corporate and financing matters, because you understand the fearsome subject called insolvency!
You can get more client mandates and senior level positions in top firms or corporations.
Considering the vastness of the banking and finance sector, can you imagine the demand for the handful of professionals with proven expertise in insolvency?
Do you want to prepare yourself to meet that demand?
Are you ready to welcome the opportunity of a lifetime?
Just attend our FREE, LIVE, online bootcamp on How to become an insolvency professional in India (for professionals with 10+ years of experience), on May 6-7, 2023 from 6.00-9.00 pm IST both days.
We will give you a roadmap on how to get a high-paying job or start your own consulting company after cracking the Limited Insolvency Exam, and build that unbeatable, recession-proof career!