ED–IBBI Coordination Clears Path for Restitution of PMLA-Attached Assets in IBC Cases

Moneylife Digital Team 06 November 2025

Economy & Nation

The directorate of enforcement (ED) has announced a coordinated initiative with the Insolvency and Bankruptcy Board of India (IBBI) to enable the release of assets attached under the Prevention of Money Laundering Act (PMLA) for use in insolvency resolution processes under the Insolvency and Bankruptcy Code (IBC). The step aims to maximise recovery for creditors, including banks and home-buyers, while ensuring that proceeds of crime remain beyond the reach of offenders.

In a release, ED says it has taken proactive measures to resolve long-standing obstacles where assets of companies undergoing corporate insolvency resolution process (CIRP) or liquidation were frozen under PMLA orders. These attachments often restricted the use of such assets in the resolution process and delayed creditor recoveries. To address this, ED and IBBI conducted multiple coordination meetings to establish a standard mechanism for restitution of attached assets during insolvency or liquidation. The process now enables resolution professionals (RPs) to apply before special courts under Sections 8(7) and 8(8) of the PMLA for release of assets, subject to specific safeguards and compliance.

As part of this framework, IBBI has circulated a standard undertaking that insolvency professionals (IPs) must submit before the special court while seeking release of attached assets. The undertaking ensures that the restituted assets are used exclusively for the benefit of creditors, that no undue advantage or indirect benefit flows back to the accused promoters or related parties, and that full compliance and reporting safeguards remain in force until the insolvency or liquidation process is concluded. This undertaking was finalised in consultation with ED and has been formally issued by IBBI through circular noIBBI/CIRP/87/2025 dated 4 November 2025.

The circular, signed by Rajesh Tiwari, general manager at IBBI, advises that in cases where assets of a corporate debtor are attached under the provisions of PMLA, the IP may file an application before the special court for restitution of such assets. It further notes that the standard undertaking will help ensure expeditious disposal of such applications and improve the efficiency of insolvency proceedings. “The restitution of attached assets can significantly enhance the value of the corporate debtor, thereby leading to higher realisation,” IBBI says in its communication.

ED, in its release, emphasised that strict enforcement under PMLA and value maximisation under IBC are not conflicting goals. When coordinated, both legal frameworks complement each other by ensuring the prosecution of economic offenders while protecting public and creditor interests through lawful resolution. The directorate stated that it remains committed to ensuring that proceeds of crime are not enjoyed by offenders, while enhancing recovery value for creditors through timely cooperation with the insolvency framework. It also says that the initiative will expedite the resolution process under IBC and help resolve numerous litigations pending before courts over asset attachments.

The new mechanism brings clarity to how attached assets are treated during insolvency and ensures a consistent approach among special courts, resolution professionals, and insolvency agencies. It marks a significant procedural improvement from earlier practices where lack of clarity over jurisdiction and compliance requirements delayed asset release even after resolution plans were approved.

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