ED widens scrutiny of possible irregularities in IBC proceedings | Explained
Enacted in 2016, the Code provides a time-bound framework for resolving insolvency and maximising the value of a distressed company’s assets
The Enforcement Directorate (ED) has expanded its investigation into potential irregularities in proceedings under the Insolvency and Bankruptcy Code (IBC). At a recent conference, ED Director Rahul Navin instructed zonal offices to re-examine cases involving excessive reductions in creditor claims, which could indicate collusion in the resolution process.
The agency has identified several areas requiring scrutiny, including manipulation of the Committee of Creditors, asset stripping, and artificially large haircuts. ED has already conducted searches in cases related to Angle Infrastructure Private Limited, its resolution professional and Nauseva Buildwell LLP, uncovering evidence of an undervalued land sale and attempts to pressure homebuyers.
In another case, ED arrested Arvind Kumar, alleging he helped create a manipulated Committee of Creditors in favor of former promoters. The Code allows for a time-bound resolution of insolvency issues, but the ED's actions suggest potential misuse of the process.
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