The government is planning to have a more foolproof mechanism to foil the chances of company promoters diverting funds fraudulently before filing for personal insolvency.
As per a new section 164A introduced in the Insolvency and Bankruptcy Code (Amendments) Bill, 2025, the resolution professionals (RPs) can approach National Company Law Tribunal (NCLT) to bring all kinds of |”avoidance transactions” back into the pool.
Closing loopholes in personal insolvency cases
Experts said that this section will discourage personal guarantors from hiving off assets before filing for bankruptcy under the Code. “The proposed section 164A of the IBC empowers the adjudicating authority to claw back undervalued transactions in cases of…