Resolution Professional Not Entitled To Success Fee: NCLAT

The National Company Law Appellate Tribunal, Delhi (NCLAT) in its recent judgment in Jayesh N. Sanghrajka erstwhile R.P. of Ariisto Developers Pvt. Ltd. v. Monitoring Agency nominated by Committee of Creditors of Ariisto Developers Pvt. Ltd. held that a resolution professional (RP) would not be entitled to a 'success fees' that is based upon certain contingency and is speculative in nature. The NCLAT observed that the fee charged by an RP must be reasonable and based on the services rendered in the insolvency resolution process. The NCLAT concluded that a success fee for an RP was not covered by the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) or the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (Regulations). In this article, we briefly navigate through the facts and findings of the case which led to the aforementioned judgment.