IBBI Suspends Insolvency Professional Kannan Tiruvengadam for Two Years Over BRG Iron & Steel Private Sale

The Insolvency and Bankruptcy Board of India has suspended the registration of insolvency professional Kannan Tiruvengadam for two years after finding serious process failures in the private sale of BRG Iron & Steel Co. Pvt. Ltd. during liquidation. The disciplinary order, No. IBBI/DC/343/2026 dated September 3, 2026, is particularly relevant to insolvency professionals, committee members, lenders and advisers because it treats consultation with the Stakeholders' Consultation Committee as a substantive safeguard rather than a formality that can be completed after a transaction has already been decided.

The order arose from the liquidation of BRG Iron & Steel Co. Pvt. Ltd. The company's corporate insolvency resolution process had commenced before the NCLT, Kolkata on March 5, 2019. Kannan Tiruvengadam was appointed as the interim resolution professional and later the resolution professional. When liquidation commenced on February 3, 2020, he continued as liquidator.

Six e-auctions failed before a private-sale offer was accepted

According to the disciplinary order, six public e-auctions were conducted between October 2020 and July 2021. The reserve price had originally been set at ₹1,179 crore. By the last failed auction, the reserve price stood at ₹506.03 crore.

A binding offer from Rimjhim Ispat Ltd. for ₹507.20 crore was received on October 25, 2021. The liquidator issued a letter of acceptance on October 28, 2021 and a sale certificate on November 18, 2021. The IBBI disciplinary committee found that the Stakeholders' Consultation Committee was not consulted before the decisive steps in the private sale. The committee was informed of the completed sale only at a meeting on March 14, 2022.

IBBI focused on what was placed before the stakeholders

The disciplinary committee examined whether the liquidator had meaningfully consulted the stakeholders before accepting the private-sale proposal. It found that the actual offer, the legal opinions relied upon and the decision to accept the offer were not placed before the Stakeholders' Consultation Committee before the transaction was concluded.

The order describes the sequence as showing undue haste. That finding matters because liquidation decisions are often commercially time-sensitive, but the statutory and regulatory framework still requires a documented process. Where the regulations require consultation, a professional cannot convert the consultation into an after-the-event information exercise.

The disciplinary committee held that the conduct breached obligations under Section 208(2)(a) to (e) of the Insolvency and Bankruptcy Code, Regulation 31A(1)(b) of the IBBI (Liquidation Process) Regulations and clauses 1, 2, 12 and 14 of the Code of Conduct for insolvency professionals.

Investigation followed information shared by the Income Tax Department

The IBBI recorded that the Central Board of Direct Taxes had shared a confidential office memorandum dated December 18, 2025 containing material arising from search proceedings concerning Rimjhim Ispat and the liquidation transaction. The Board then carried out its own investigation. An investigation notice was issued on February 19, 2026, the investigation report was completed on April 29, 2026 and a show-cause notice dated July 9, 2026 was issued to the insolvency professional. He filed his response on July 24.

The disciplinary order also notes that the insolvency professional did not personally appear before the committee despite three opportunities and was represented by counsel. The Board linked professional conduct to the continuing requirement that an insolvency professional remain fit and proper throughout registration.

IBBI did not decide the allegation of illegal gratification

A significant caveat in the order is that the disciplinary committee did not adjudicate the allegation concerning illegal gratification. It expressly noted that the Income Tax Department's investigation on that issue was underway and that the matter was outside the disciplinary committee's jurisdiction for the purpose of the order. Readers should therefore distinguish the process contraventions actually decided by IBBI from allegations that remain under investigation elsewhere.

Two-year suspension and consequences for existing assignments

IBBI ordered suspension of Kannan Tiruvengadam's insolvency-professional registration for two years. The order is to take effect after 30 days from its issuance. It also records the statutory consequence under Section 206 of the IBC: once the suspension becomes effective, he cannot continue to act as an insolvency professional.

Accordingly, committees of creditors and stakeholder consultation committees in assignments where he is serving as resolution professional or liquidator are required to replace him with another insolvency professional. Copies of the order are also to be sent to the Indian Institute of Insolvency Professionals of ICAI and the Principal Bench of the NCLT.

What insolvency professionals and finance teams should take away

- Consult before deciding: where the liquidation regulations require stakeholder consultation, the key commercial proposal and material supporting advice should be placed before the committee before acceptance.

- Document the decision trail: minutes should show what information was shared, what views were received and how the liquidator reached the final decision.

- Private sale needs stronger process discipline: repeated auction failures may justify consideration of another sale route, but they do not remove consultation and conduct requirements.

- Separate decided contraventions from pending allegations: disciplinary reporting should accurately distinguish findings made by IBBI from matters still being investigated by other authorities.

- Registration fitness is ongoing: professional obligations continue throughout an insolvency practitioner's assignments and are not limited to the date of initial registration.

Practical takeaway: the September 3 order is a clear warning that transaction speed cannot replace process integrity in liquidation. A private sale may be commercially defensible, but the insolvency professional must be able to demonstrate timely consultation, a complete record and compliance with the Code and liquidation regulations before the deal is closed.

Official source: View the official source document

Key takeaway

A fresh official IBBI order provides concrete compliance lessons on private sale, stakeholder consultation, professional conduct and replacement of an IP after suspension.