In a bid to make resolution plans more transparent, the Insolvency and Bankruptcy Board of India (IBBI) has amended its regulations, whereby avoidance transactions must be disclosed upfront in the Information Memorandum prepared by the corporate debtor’s resolution professional.
Avoidance transactions include undervaluation, fraud, overvaluation, preferential diversion or a combination of some of these.
Now, all avoidance transactions have necessarily to be included in the Information Memorandum, as per the IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025.
This is now a mandatory part of the resolution plan and cannot be assigned without disclosures. What this means is that avoidance…