The Insolvency and Bankruptcy Board of India (IBBI) has flagged instances of companies using the corporate insolvency resolution process (CIRP) for purposes other than resolving insolvency, including settling debts outside the normal recovery process, mitigating tax and other statutory liabilities and shielding assets from regulatory scrutiny.
In a discussion paper issued on Friday, the insolvency regulator said it had received information from law-enforcement and other regulatory agencies indicating that the CIRP framework was being used in some cases with fraudulent or malicious intent.
According to IBBI, such misuse includes attempts to close or merge companies without regulatory scrutiny, mitigate the impact of…