The Insolvency and Bankruptcy Board of India (IBBI) has flagged the misuse of the insolvency process by companies seeking to evade taxes, conceal assets and avoid regulatory or criminal action, saying the bankruptcy framework is in some cases being used for purposes other than rescuing distressed businesses.
In a recent discussion paper, the insolvency regulator said law enforcement agencies have identified instances where the Insolvency and Bankruptcy Code (IBC) has allegedly been invoked with malicious intent. Such cases include companies using insolvency proceedings to settle private debts, facilitate undisclosed mergers or combinations without regulatory scrutiny, and shield assets from enforcement action.
The IBBI has proposed…