Dodgy deals under resolution professionals' lens
NEW DELHI : Bankruptcy resolution professionals (RPs) have stepped up scrutiny of suspect transactions made before bankruptcy filings, moving tribunals to reverse transactions totalling ₹23,700 crore in the September quarter alone. While 24 such questionable transactions—called voidable or avoidance transactions—were flagged to tribunals in the March quarter, it was followed by 76 and 78 in the June and September quarters.
The amounts involved rose as well, from ₹2,475 crore in the March quarter to ₹10,220 in the June quarter and to ₹23,708 crore in the September quarter, data from bankruptcy rule maker Insolvency and Bankruptcy Board of India (IBBI) showed. RPs suspect these transactions to be fraudulent, preferential or undervalued.
The increased filings show lenders are keen to recover any inappropriately alienated assets that could add to the pool of resources available for resolution under the Insolvency and Bankruptcy Code (IBC). Scrutiny of company affairs in the period of financial distress leading to payment defaults also points to their concerns that the management and major shareholders may have taken decisions in that period that may not be in the interest of the creditors.
Experts said legal clarity on certain issues has encouraged lenders and RPs. The National Company Law Appellate Tribunal (NCLAT) has held that a transaction audit report is not absolutely necessary to file an application under an IBC section that allows tribunals to direct those involved in fraud to contribute to the assets of the bankrupt business.
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