Mumbai: Close on the heels of the Subhash Chandra loan repayment controversy, the bankruptcy regulator-the Insolvency and Bankruptcy Board of India (IBBI) has issued a circular on Wednesday directing Insolvency Professionals (IPs) to remain vigilant regarding the potential misuse of the insolvency framework.
The IBBI said that it has received information from law enforcement and regulatory agencies that the Insolvency and Bankruptcy Code, 2016 is being used to dodge taxes, evade regulatory scrutiny, mitigate the impact of ongoing investigations or penalties, close or merge companies without regulatory scrutiny, or monetise and ring-fence assets rather than addressing insolvency.
The circular listed several possible warning signs of…