The NCLAT confirmed that the remuneration for Interim Resolution Professionals (IRP) should be based on actual work, rather than just the duration of appointment. This reinforces the importance of performance-based remuneration in insolvency proceedings.
NCLAT Ruling on Interim Resolution Professional Remuneration
The National Company Law Appellate Tribunal (NCLAT) recently upheld the National Company Law Tribunal's (NCLT) decision to reduce the remuneration of an Interim Resolution Professional (IRP) to ₹50,000 during a stay period. This order emphasizes that fee entitlements under Regulation 34B should correlate with the actual work performed by the IRP rather than merely the duration of their appointment.
The Tribunal noted that the remuneration structure is intended to reflect the extent of work executed, thereby ensuring that IRPs are compensated fairly based on their contributions to the insolvency process. In this case, the reduction was considered reasonable given the findings regarding the quantum of work undertaken by the IRP during the relevant period.
This ruling brings clarity to the regulatory framework governing IRP remuneration and highlights the NCLAT's commitment to uphold the principles of accountability and performance-based compensation in insolvency proceedings. Legal practitioners should take heed of this ruling as it may influence how they structure remuneration agreements for IRPs going forward.
“Fee entitlement under Regulation 34B depends on the extent of actual work performed, not merely on appointment duration,” the NCLAT stated.
Implications for practitioners include a strengthened precedent for negotiating remuneration based on demonstrable work output, which could lead to more equitable compensation structures in future insolvency cases.
Citations
- In re: [Application Number] (2026) NCLAT Order
