STARTUP LEGAL2 Sept 2026
IBBI Wants Insolvency Experts to Flag Malicious Cases
India's insolvency regulator has proposed new duties for insolvency professionals (IPs) to spot and report possible misuse of the corporate insolvency process. IPs must now examine records for fraud, do due diligence, and approach the adjudicating authority under Sections 60(5) and 65 of the IBC. Experts worry honest business setbacks may be mistaken as red flags.
Key Statutory Highlights
- The IBBI discussion paper puts new responsibility on insolvency professionals to identify and report potential misuse of CIRP.
- IPs must examine books and CoC proceedings and approach the adjudicating authority under Sections 60(5) and 65 of the IBC.
- Lawyers caution that IPs may face a structural conflict when challenging the creditors who appointed them.
Actionable Advice for Taxpayers / Founders:If you are a creditor thinking of initiating insolvency, ensure your claim has genuine commercial backing and clean documentation, since insolvency professionals will now scrutinise filings more closely.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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