📚 PASS Research Analyst Certification Examination Difficulty: Intermediate ℹ️ Info   ~5 min read
📌 Chapter 14.2 — Important regulations in Indian Securities Market

Imagine you are tracking a mid-cap infrastructure firm that has recently defaulted on its debt obligations. You notice that an application has been admitted by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code. Suddenly, the existing board of directors is suspended, and an Interim Resolution Professional (IRP) is appointed to take over the management of the firm. As an analyst, this is the precise moment your valuation model shifts from ‘going concern’ assumptions to ’liquidation or restructuring’ probabilities.

The IRP is the linchpin of the Corporate Insolvency Resolution Process (CIRP). Their primary responsibility is to manage the company as a going concern, protect its assets, and ensure the business operations continue while the resolution process unfolds. They act as the public face of the debtor during the moratorium period, gathering information and organizing the Committee of Creditors (CoC). For you as an analyst, the IRP’s public disclosures become your most reliable primary data source, often replacing the now-stalled communication from the original management.

Understanding the IRP’s role is critical because they dictate the timeline and the quality of information flowing to the market. When an IRP takes charge, they perform an immediate forensic assessment and inventory of assets, which may lead to significant write-downs in your DCF models. For instance, if an IRP discovers that certain project receivables are non-recoverable or that key inventory has been depleted, your target price must reflect these impairments immediately. Your recommendation should move from evaluating earnings growth to assessing the ’liquidation value’ versus the ‘resolution plan’ potential.

Beyond valuation, the IRP’s role highlights the shift in power dynamics within the company. The board of directors no longer has the authority to make major strategic decisions or influence share price narratives through aggressive management guidance. Any signal coming from the firm is now filtered through the rigor of the IBC framework. By tracking the IRP’s filings on the NCLT website, you ensure your research remains grounded in legal reality rather than historical management optimism.1

Nuance

⚠️ Nuance
Candidates often mistakenly believe the IRP is an advocate for the company’s existing shareholders or the old management. In practice, the IRP acts as a neutral officer of the court whose primary duty is to the creditors and the integrity of the resolution process. Thinking of the IRP as a ‘manager’ in the traditional corporate sense is a trap; they are a fiduciary for the resolution process, which often requires them to take actions that are highly detrimental to the original equity holders.

Check Your Understanding

Practice Question 1

Following the admission of an insolvency application, which of the following is a primary duty of the Interim Resolution Professional (IRP)?

Practice Question 2

Which action by the IRP is most likely to cause an analyst to revise a ‘Buy’ rating to ‘Sell’ due to a fundamental change in asset valuation?

This is a companion read for Section 14.2 — Important regulations in Indian Securities Market from PASS Research Analyst Certification Examination by Akhilesh Gururani, available on Amazon Kindle.

Copyright © 2026 Akhilesh Gururani. All rights reserved.

  1. The moratorium period, triggered upon the appointment of the IRP, freezes all legal proceedings and asset transfers against the debtor to allow for a structured resolution. ↩︎