NEW DELHI: Enforcement Directorate will start a drive against fraud under Insolvency and Bankruptcy Code, including cases of alleged collusive resolutions involving disproportionately large haircuts which helped defaulting promoters re-acquire assets.In a direction to zonal offices during a three-day high-level meeting of the agency’s special directors in Bengaluru, ED director Rahul Navin asked them to initiate money laundering investigations against chief protagonists of resolutions which are prima facie dubious but were cleared by National Company Law Tribunal (NCLT).
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“Identify red flags, obtain copies of applications related to preferential, undervalued, fraudulent and extortionate transactions from resolution professionals, file intervention applications before the tribunal, and initiate independent investigations under PMLA against masterminds,” he is learned to have told his senior colleagues.The decision to crack down on alleged cases of fraudulent re-acquisition of assets through NCLT, manipulating voting by front entities forming a majority in a committee of creditors, has come at a time when ED is looking into prominent cases. Ownerships of some linked bankrupt companies were allegedly transferred to front entities after creditor banks took haircuts for up to 97-99% of the admitted claims.ED is examining interplay of IBC and PMLA, particularly “the legal tension between the moratorium under Section 14 and the immunity under Section 32A of the code on the one hand, and attachment powers under PMLA on the other”.
