The Insolvency and Bankruptcy Board of India (IBBI) has warned insolvency professionals against the misuse of the Insolvency and Bankruptcy Code, 2016, for purposes including reducing tax liabilities, avoiding regulatory scrutiny and obstructing investigations.
The regulator has directed professionals to closely examine suspicious insolvency proceedings and act when there are reasonable grounds to suspect fraudulent or malicious intent.
IBBI Flags Misuse Beyond Genuine Insolvency
In a circular, the IBBI said it had received information from law enforcement and regulatory agencies indicating that, in some cases, the insolvency framework was being used for purposes other than resolving insolvency or liquidating a corporate…