In a significant move aimed at resolving long-pending insolvency cases, the Enforcement Directorate (ED) and the Insolvency and Bankruptcy Board of India (IBBI) have jointly formulated a Standard Operating Procedure (SOP) for the return of assets seized under the Prevention of Money Laundering Act (PMLA). Under the new framework, assets seized from insolvent companies and their promoters can now be restored to legitimate claimants — including banks, homebuyers, and other creditors.
This initiative is expected to accelerate the insolvency resolution process and help settle several cases currently pending in various courts. The IBBI emphasized that the new mechanism has been designed to be transparent, efficient, and in the public interest, ensuring timely justice for all affected stakeholders.
IBBI Issues Circular Detailing the New Process
In a recent circular, the IBBI stated that the SOP was finalized after multiple rounds of deliberations between the two agencies. As per the new framework, Insolvency Professionals (IPs) will now be required to submit a “Standard Undertaking” before the Special Court under the PMLA. On the basis of this undertaking, the ED will release the attached properties, allowing them to be transferred to banks, homebuyers, or other legitimate lenders.
Relief for Stalled Insolvency Assets
In many insolvency cases, corporate debtors’ assets had been attached by the ED under PMLA provisions, preventing them from being used in the resolution process. The newly established mechanism will remove this bottleneck, enabling the restoration of such assets during liquidation.
ED Statement: Emphasis on Transparency and Accountability
In its statement, the ED clarified that the new process will empower Resolution Professionals to apply under Sections 8(7) and 8(8) of the PMLA for the release and restoration of attached properties. The agency further stated that these assets will be used solely for the benefit of creditors, ensuring that no accused promoter or related party derives any undue advantage.
Boost to Investor Confidence and Economic Governance
Experts view this development as a landmark step toward strengthening India’s insolvency and recovery ecosystem. By resolving the long-standing issue of asset utilization under PMLA, the initiative is expected to restore investor confidence, improve credit recovery, and offer long-awaited relief to thousands of homebuyers whose funds were stuck in insolvent projects.
