IBBI: IP to Seek Restitution of ED-Attach Asset under PMLA

IBBI Directs Insolvency Professionals to Seek Restitution of ED-Attached Assets under PMLA

Insolvency and Bankruptcy Board of India Issued Direction on 4th November 2025 Applies to all Insolvency Professionals, IP Entities, & IP Agencies. Deals with cases where corporate debtor’s assets are attached by the Enforcement Directorate (ED) under Prevention of Money Laundering Act, 2002 during insolvency proceedings.

The Insolvency and Bankruptcy Board of India has issued a directive requiring Insolvency Professionals (IPs) to approach Special Courts under the Prevention of Money Laundering Act to seek restitution of assets belonging to corporate debtors attached by the ED. According to the circular, Insolvency Professionals may file applications u/s 8(7) or 8(8) of the Prevention of Money Laundering Act for the release or restitution of such assets. The IBBI stated that this measure aims to enhance the value of the corporate debtor’s estate, thereby enabling better recovery and higher realisation for creditors under the IBC process.

A prescribed undertaking must accompany the application & undertaking directions

This directive is part of the regulator’s continued effort to ensure that assets critical to resolution are effectively recovered and brought within the insolvency process. A prescribed undertaking must accompany the application & undertaking directions is mention here under :

• Application for Restitution: IPs should file an application before the Special Court under PMLA (Sections 8(7) or 8(8)) for restitution of attached assets.
• Insolvency and Bankruptcy Board of India issue an Standard Undertaking under Prevention of Money Laundering Act (Sections 8(7) or 8(8)) for restitution of attached assets: A prescribed undertaking must accompany the application. Key obligations include:
• Usage Restrictions: Restituted assets cannot benefit promoters ineligible under Section 29A or any accused in ED cases.
• Periodic Reporting: Quarterly reports to the Special Court on asset status, usage, and beneficiaries.
• Disclosure: Details of ED-attached properties in Information Memorandum/Auction Notices.
• Cooperation with ED: Share details of PUFE transactions, CoC composition, and Successful Resolution Applicant.
• Document Production: Provide requested documents, with safeguards for commercially sensitive information.
• Duration: Undertaking remains effective until resolution plan approval or dissolution order.

IBBI the prescribed undertaking must accompany the application. 

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