In a new circular, the IBBI has underlined the need for insolvency professionals to carry out due diligence to guard against misuse of the IBC framework.
“The IBBI has received information from law enforcement and regulatory agencies that, in certain cases, the framework under the Insolvency and Bankruptcy Code, 2016 is being misused for purposes other than insolvency resolution or liquidation of the corporate debtor (CD),” it said in a recent circular.
Such instances include, inter alia, mitigating tax liabilities; closing or merging companies without regulatory scrutiny; mitigating investigations, prosecution and penalties under various statutes; and monetising and ring-fencing assets, it said.
Given their access to the books and…