IBBI Cancels Registration of Insolvency Professional for Facilitating Fraud

IBBI Revokes IP Registration Over Fraudulent Practices

The Insolvency and Bankruptcy Board of India (IBBI) has revoked the registration of an Insolvency Professional (IP) due to serious violations, including facilitating syndicated fraudulent Corporate Insolvency Resolution Processes (CIRPs), and non-disclosure of critical ongoing litigation.

This action reflects IBBI's stringent approach towards maintaining the integrity of the insolvency framework, particularly in situations where professionals fail to uphold their duties by ignoring evident signs of malpractice or statutory obligations. The decision highlights the essential requirements for professionals to conduct thorough investigations and maintain transparency regarding material litigations impacting the resolution process.

The order explicitly held that the non-disclosure of material fact not only contravenes the provisions of the Insolvency and Bankruptcy Code but also endangers the rights of creditors and stakeholders who rely on the integrity of the process.

For insolvency practitioners, this ruling underscores the criticality of compliance with all statutory requirements and thorough due diligence prior to engaging with CIRPs. Practitioners should heed this ruling as a benchmark for ethical standards and professional responsibility in insolvency processes.

“Facilitating fraudulent practices in the resolution process is intolerable,” the IBBI declared in its order.