On July 3, the committee disqualified an insolvency professional for orchestrating a systemic misuse of the insolvency process across 10 interconnected corporate entities.
Against this backdrop, the regulator’s September 9 circular urging “due diligence by Insolvency Professionals regarding misuse of IBC framework” was a long time coming.
Citing instances such as attempts to mitigate tax liabilities, close or merge companies without regulatory scrutiny and evade investigations, prosecution and penalties under various statutes, IBBI has placed the onus to examine potential misuse of the bankruptcy code and flag the same to tribunals, on insolvency professionals.
Former IBBI chairman M S Sahoo said that corporate…