CIRP Audit Support India for a Resolution Professional in a Large Industrial Insolvency

In the time the process allows, what does the historical transaction record actually show, and can it be documented well enough to support determinations that will be filed and challenged?

The resolution professional carries personal statutory responsibility for determinations about the historical conduct of the corporate debtor, and must reach those determinations on records assembled by the management now displaced, within a timeline that does not extend to accommodate difficulty. That combination, personal accountability on someone else's records under statutory time pressure, defines the engagement. The work had to satisfy two standards at once: complete enough to be relied upon, and documented to a level where a third party reviewing the file years later could retrace the basis of every observation without the original team present.

Four workstreams carried the examination, with emphasis throughout on identifying transactions that require a determination and documenting them to a standard that survives adversarial scrutiny.

Transactions within the statutory look-back periods were examined for indicators that trigger determinations: transfers to related parties, transactions at values inconsistent with commercial terms, preferential payments, and movements immediately preceding the onset of stress. Related party relationships were reconstructed from statutory filings, shareholding records, directorship overlaps, common addresses and transaction patterns, rather than accepted from disclosures. End use of material disbursements was tested against sanctioned purpose. Balance sheet anomaly analysis assessed sundry creditor and debtor balances against operating scale, and pricing analysis compared related party transactions against arm's length benchmarks. Each finding was documented with its date, counterparty, value, supporting record and the reason it was flagged.

Three disciplines separated this engagement from CIRP support work that does not survive challenge.

First, statutory framing from day one. The examination was organised around the determinations the resolution professional had to make, not around a general audit programme. Work organised the other way produces a great deal of analysis and very little that maps to a filing.

Second, documentation written for a reader who is not in the room. Every working paper was prepared on the assumption it would be read years later, by someone hostile, without the preparer available. That assumption changes how papers are written, and it is the difference between a file that supports a determination and one that undermines it.

Third, gaps recorded as gaps. Where records were incomplete, the incompleteness was documented rather than bridged by assumption. In an insolvency context an assumption inserted quietly into a working paper is the single most likely point of failure under challenge.

A corporate insolvency resolution process where the corporate debtor has a complex group structure. Statutory determinations required on look-back transactions within a compressed timeline. Records assembled by displaced management, with completeness in doubt. Related party relationships suspected to extend beyond what was disclosed. Asset movements in the period preceding commencement that require examination. A previous examination that a resolution professional could not comfortably rely upon. Creditor pressure for an evidenced position rather than a summary view.