The Insolvency and Bankruptcy Board of India (IBBI) has made it mandatory for the resolution professionals (RPs) to formally inform the committee of creditors (CoC) about any fraudulent or avoidance transactions carried out by a company prior to its bankruptcy. The amendments are aimed at improving the transparency, and the treatment of “avoidance transactions” in the corporate insolvency resolution process (CIRP), IBBI circular said.
Under the amended rules, the RP will have to include the details of the “identified avoidance transactions or fraudulent or wrong trading” in the information memorandum, which is essentially a comprehensive document giving details about the corporate debtor undergoing CIRP.
Till recently, the…