In a relief to the cheated home buyers and banks, the Enforcement Directorate (ED) and the Insolvency and Bankruptcy Board of India (IBBI) have come out with a circular to safeguard the interests by restoring the attached assets.
Assets of bankrupt companies and their promoters attached by the Enforcement Directorate, under the anti-money laundering law, will now be restored to the affected parties, such as banks or home buyers, following the finalization of a new standard operating procedure, said ED on Wednesday.
The IBBI issued a circular in this context on November 4, following “multiple rounds” of coordination meetings between its officials and the investigators of the ED. Currently, in several insolvency cases, the assets of the corporate debtor are under PMLA attachment, which “restricts” their use in the resolution process.
As a result of this coordinated approach, the agency said in a statement, a “standard undertaking” will be filed by Insolvency Professionals (IPs) before the special PMLA court to release the assets from ED’s attachment and offer them for restitution or restoration to the creditors.
To address this issue, the ED and IBBI have created a standard mechanism for restitution of attached assets when liquidation proceedings are on. The restitution or restoration of assets to the affected parties, such as banks and homebuyers who were cheated, is a remedy available under the PMLA.
“This process now enables Resolution Professionals to seek release of such assets through applications filed under Sections 8(7) and 8(8) of PMLA,” the ED said.
The new mechanism will ensure that the restituted assets are used only for the benefit of creditors; no advantage flows back to the accused/promoters, and full reporting and compliance safeguards remain in place until resolution is completed, it said.
