Overview
- The IBBI issued a November 4 circular, developed with the ED, that activates a standard operating procedure and undertaking for seeking restitution of ED-attached assets.
- Insolvency professionals are directed to file applications under Sections 8(7) and 8(8) of the PMLA before special courts rather than the NCLT to secure release of such property.
- The undertaking commits that restituted assets benefit only creditors, bars any advantage to accused promoters, and requires disclosure in information memoranda or auction notices.
- Quarterly reports to the special court and full cooperation with ED investigations are mandated, with commercially sensitive documents shared subject to written acknowledgment of their sensitivity.
- Legal experts welcomed the coordination as value-accretive yet cautioned that the ED’s power to make initial attachments remains and added reporting duties could slow timelines.