NEW DELHI: The Enforcement Directorate (ED) announced that the assets of bankrupt companies and their promoters, which were previously attached under anti-money laundering laws, will now be returned to affected parties like banks or homebuyers. This follows the establishment of a new standard operating procedure, as stated by the federal probe agency on Wednesday.
The Insolvency and Bankruptcy Board of India (IBBI) issued a circular on November 4 after extensive coordination meetings with ED officials.
The coordinated efforts resulted in a “standard undertaking” to be submitted by Insolvency Professionals (IPs) to the special PMLA court for releasing ED-attached assets for restitution to creditors.
Currently, various insolvency cases have assets under PMLA attachments, which hampers their resolution process.
To resolve this, the ED and IBBI have devised a mechanism for restoring attached assets during liquidation proceedings.
This restoration is available for parties affected, such as banks and cheated homebuyers, under the PMLA.
“This setup allows Resolution Professionals to request the release of such assets through applications filed under Sections 8(7) and 8(8) of PMLA,” the ED explained.
The new protocol ensures that restituted assets are exclusively utilized for the benefit of creditors, preventing any advantage from reaching the accused or promoters, while maintaining strict reporting and compliance until resolution is finalized.
“This initiative illustrates that strict enforcement under the PMLA and value maximization under the IBC are complementary goals. Together, they facilitate the prosecution of economic offenders while safeguarding public and creditor interests through lawful resolution,” the agency added.
Moreover, the ED remains dedicated to ensuring that proceeds of crime do not benefit offenders, even as it enhances recovery value for creditors via timely collaboration with the insolvency framework.
“These initiatives aim to accelerate resolution processes under the IBC and streamline ongoing litigations,” it concluded.
