INDIA Trends and Developments Contributed by: Vijayendra Pratap Singh, Priyank Ladoia, Arjun Narang and Puneet Dhanoa, AZB & Partners
insolvency tribunals cannot strong-arm the ED into releasing assets, the PMLA’s own internal mechanism can be actively used to bring proceeds of crime back into the corporate rescue ecosystem. This specific breakthrough in the BPSL case served as the direct catalyst and legal foundation for the recent Insolvency and Bankruptcy Board of India (IBBI) and ED circulars, which have now institutionalised this restitution pro - cess as a standard operating procedure for all future insolvency cases. Institutional Harmonisation: a Standardised Protocol for Resitution A major policy development occurred with the release of the IBBI Circular dated 4 November 2025, and the press release dated 5 November 2025 by the ED. Both of these steps collectively established a standardised mechanism through which insolvency professionals may seek restitution of assets attached under the PMLA during CIRP or liquidation. The solution achieved in the BPSL case highlighted the need for a systemic, standardised approach. Rec - ognising this, the IBBI and the ED issued said co- ordinated directives in November 2025. The IBBI issued a circular advising insolvency pro - fessionals that, in cases where assets of a corporate debtor are attached by the ED, insolvency profession - als should formally file an application before the spe - cial court under Sections 8 (7) or 8 (8) of the PMLA for the restitution of those assets. Simultaneously, the ED released a press release affirming its proactive sup - port for IBC resolutions, declaring that strict enforce - ment under the PMLA and value maximisation under the IBC are not conflicting objectives. To expedite these applications, the IBBI formulated a mandatory standard undertaking to be filed by insol - vency professionals before the special court. This undertaking imposes strict compliance safeguards, including: • usage of restituted assets – the insolvency profes - sionals must guarantee that the restituted assets are not sold or transferred to anyone ineligible under Section 29A of the IBC, nor can they benefit any person accused in the ED’s proceedings;
• periodic reporting – the insolvency professional is required to submit quarterly status reports to the special court, detailing the usage, monetisation and distribution of the assets; • co-operation and disclosures – the insolvency professional must extend full co-operation to the ED, proactively reporting preferential, undervalued, fraudulent or extortionate (PUFE) transactions, and sharing detailed information regarding the Commit - tee of Creditors and the SRA; and • document production – while non-commercially sensitive documents must be provided immediate - ly, commercially sensitive data (such as valuation reports) are protected and only shared once the ED acknowledges their sensitivity in writing. By institutionalising this process, the circular and press release respect the Supreme Court’s boundary set in BPSL as they keep the jurisdiction to release assets firmly within the special PMLA courts, avoiding overreach by the insolvency professionals and provid - ing a clear, lawful pathway to access frozen assets. Conclusion The co-ordinated response by the IBBI and ED reflects a broader policy recognition. It recognises the pro - longed conflict between insolvency and PMLA pro - ceedings and that this ultimately harms the public interest. In large corporate frauds, the principal finan - cial creditors are often public sector banks. Therefore, delays in resolution or uncertainty can significantly erode asset value and undermine creditor recoveries, which ultimately affects banks and the public excheq - uer. However, as highlighted above, such restitution may be permissible under the PMLA Restitution Rules, which allows for consideration of applications under Section 8 (8) PMLA only after framing of charges in the trial initiated by the ED. Practically speaking, in some cases the stage of framing of charges may take years, in which case the introduction of this co-ordinated protocol may fall victim to the substantive delays in investigation and criminal trials. While the new frame - work directly addresses uncertainty surrounding attached assets as one of the major sources of delay, further consideration may be required to resolve the issues that could arise in its implementation.
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