The Operational and Fiduciary Conundrum: Evaluating the Evolving Roles of Resolution Professionals and Liquidators in Corporate Insolvency Proceedings

Abstract

The current corporate insolvency structure is designed to find a balance between the two conflicting poles of corporate rescue and economic efficiency of asset liquidation. The operational equilibrium is based on two specialized institutional actors: the Resolution Professional (RP) and the Liquidator. This paper explores the evolving operational paradigms, legal delineations, and fiduciary duties of these entities in the context of contemporary insolvency regimes, using India’s Insolvency and Bankruptcy Code (IBC), 2016 and the UK Insolvency Act 1986 as reference points. This paper systematically studies how the shift from a ‘debtor-in-possession’ model to a ‘creditor-in-possession’ model impacts the fiduciary alignment of the Resolution Professional vis-à-vis the Committee of Creditors (CoC) while necessitating the preservation of the value of the going concern under severe liquidity shocks. On the other hand, it studies the transformation of the regulatory goal from value preservation to asset maximization, recovery speed and fair distribution of wealth under the strict waterfall mechanics by the liquidator's mandate. Based on a doctrinal analysis of statutory mandates and landmark judicial precedents until 2026, this paper identifies critical systemic challenges, including severe institutional delays, asymmetric data environments, collective action dilemmas within creditor committees, and professional liability overreach. The paper calls for substantive policy interventions that include the codification of standardized cross-border protocols, the adoption of robust group insolvency frameworks, and the extension of immunities for professional actors acting in good faith. This research ultimately demonstrates that the efficiency of macroeconomic credit ecosystems critically depends on the clarification of the statutory and fiduciary limits of these two pillars of the insolvency governance.