NEW DELHI: The insolvency regulator has formalised a framework to facilitate the release of corporate debtors’ assets attached under the Prevention of Money Laundering Act (PMLA) to support resolutions under the Insolvency and Bankruptcy Code (IBC).
In a circular issued on Tuesday, the Insolvency and Bankruptcy Board of India (IBBI) has advised all registered Insolvency Professionals (IPs) to file applications before the Special Courts under the Prevention of Money Laundering Act (PMLA) to seek the restitution of assets of corporate debtors that have been attached by the Enforcement Directorate (ED).
This move is aimed at enhancing the value of the Corporate Debtor and leading to higher realisation in insolvency cases.
To facilitate the faster freeing of such assets, the IBBI, in consultation with the ED, has formulated a standard undertaking. IPs must furnish this undertaking along with their application to the Special Court.
The standard undertaking requires the Insolvency Professional, acting as a Resolution Professional or Liquidator, to make several key commitments until the approval of the resolution plan or dissolution order by the Adjudicating Authority:
The insolvency professional is required to submit quarterly status reports to the Special Court detailing the status of the restituted assets, details of their usage or monetisation, a list of beneficiaries of any distribution, and information on any sale or transfer of the restituted property.
The framework also requires the IPs to disclose the details of all properties under ED attachment in the Information Memorandum or Auction Notice and update this information if further details become available.
The IP must also extend full cooperation to the ED during its investigation, including providing details of preferential, undervalued, fraudulent, or extortionate (PUFE) transactions as and when identified. The insolvency professional must also give details of the Committee of Creditors (CoC), including its constitution and voting shares, details of the successful resolution applicant (SRA) including relevant NCLT applications and orders.
