Regulator IBBI on Wednesday asked insolvency professionals to do due diligence to prevent misuse of the insolvency resolution framework to mitigate tax liabilities and close companies without regulatory scrutiny.
IBBI is a key institution in implementing the Insolvency and Bankruptcy Code (IBC) that provides for timely and market-linked resolution of stressed assets.
In a two-page circular, the Insolvency and Bankruptcy Board of India (IBBI) said it has received information from law enforcement and regulatory agencies that, in certain cases, the IBC framework is being misused for purposes other than insolvency resolution or liquidation of the corporate debtor.
“Such instances include, inter alia, mitigating tax liabilities,…