Imagine a corporate debtor undergoing the Corporate Insolvency Resolution Process. Every rupee lying in its bank accounts becomes critical to sustain operations, pay employees and preserve value for creditors. Yet, at the same time, the Enforcement Directorate or other investigating agencies may step in on allegations of money laundering and freeze those very accounts. What follows is not merely a procedural hurdle, but a collision between two powerful legal regimes with competing objectives.
The Insolvency and Bankruptcy Code 2016 seeks to protect the corporate debtor through a moratorium under Section 14. The moratorium is intended to maintain calm during insolvency by halting coercive actions and ensuring that the resolution…