Consider the operational headache that follows when a corporate client, to whom your firm provided trading services, suddenly enters the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code. A client representative calls, demanding you resolve a long-pending dispute regarding a trade execution error from three months ago. Your compliance desk immediately flags that the firm cannot process this through the standard SCORES portal because the company is now under the control of an appointed Insolvency Professional.
In the high-stakes world of securities operations, recognizing when the standard grievance path ends is as vital as knowing how to initiate it.
The SCORES portal is an invaluable tool for retail investors, yet it is not a universal forum for every conflict. When a legal entity enters insolvency, the entire landscape of financial claims changes. The Insolvency and Bankruptcy Code (IBC) imposes a moratorium, centralizing all creditor claims—including those related to securities transactions—under the authority of the Resolution Professional. Attempting to resolve such a claim through SCORES could inadvertently violate the legal stay on proceedings and create significant regulatory risk for your firm.
From a risk management perspective, this requires a disciplined transition from client-facing grievance handling to legal claim processing. You must cease all standard internal redressal efforts and direct the claimant to submit their proof of claim in the prescribed Form as per the Insolvency and Bankruptcy Board of India regulations. Failing to do this could lead to the firm admitting a liability or taking actions that conflict with the waterfall mechanism of debt distribution.
As an operations professional, you serve as the bridge between the client and the legal framework, ensuring that the firm’s assets and liabilities are handled according to the specific legal status of the counterparty.
Always maintain a clear separation between standard market grievances and statutory insolvency proceedings. When a entity is in resolution, the priority is not the quick-fix 21-day timeline of SCORES, but the adherence to the insolvency timeline and the hierarchy of claims. If you are in doubt, consult the compliance officer to verify if the entity is currently listed on the NCLT website as being under insolvency, as this status fundamentally shifts how you handle any dispute.
Nuance
Check Your Understanding
Your brokerage firm receives a complaint via SCORES 2.0 regarding a legacy trade discrepancy from a corporate client currently undergoing CIRP. As an operations head, what is the most appropriate action?
Which of the following describes why insolvency-related disputes are excluded from SCORES?
This is a companion read for Section 7.2 — INVESTOR GRIEVANCE from PASS Securities Operations and Risk Management Examination by Akhilesh Gururani, available on Amazon Kindle.
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