IBBI Issues Circular Requiring IPs to File Undertaking before PMLA Special Courts for Restitution of ED-Attached Assets [Read Circular]

The Insolvency and Bankruptcy Board of India ( IBBI ) has issued a circular dated 4 November 2025 mandating that Insolvency Professionals (IPs) must file a standard undertaking before Special Courts under the Prevention of Money Laundering Act ( PMLA ) when seeking restitution of assets attached by the Enforcement Directorate ( ED ).

According to the circular, the Board observed that several corporate debtors undergoing insolvency proceedings have assets attached under the PMLA, and restitution of these assets could significantly enhance their value and increase recoveries for creditors.

To facilitate quicker adjudication by Special Courts, the IBBI, in consultation with the ED, has formulated a standard format of undertaking that IPs must submit along with their restitution applications filed under Sections 8(7) or 8(8) of the PMLA.

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Key Provisions of the Undertaking

Under the prescribed format, the Insolvency Professional must affirm that the restituted assets will be used only for legitimate insolvency resolution or liquidation purposes and will not be transferred, sold, or otherwise dealt with in a way that benefits any person ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC) or accused in an ECIR (Enforcement Case Information Report) filed by the ED.

Further, IPs are required to submit quarterly reports to the Special Court from the date of restitution until approval of the resolution plan or dissolution, detailing:

• The status and usage of restituted assets,
• Beneficiaries of any distribution, and
• Any sale or transfer of the assets.

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Disclosure and Cooperation Obligations

The undertaking also mandates IPs to make full disclosure of all properties under ED attachment in the Information Memorandum or auction notice, and to update such disclosures as new information becomes available.

Moreover, the IPs must extend full cooperation to the ED, including sharing details of any preferential, undervalued, fraudulent, or extortionate transactions (PUFE), the constitution of the Committee of Creditors (CoC), and information about the Successful Resolution Applicant (SRA) or successful bidder.

Regarding document production, the circular differentiates between commercially sensitive and non-sensitive information, allowing the ED access to sensitive documents like valuation reports or resolution plans only after it acknowledges their confidentiality in writing.

Purpose and Duration of the Undertaking

The obligations under this undertaking will remain effective until the approval of the resolution plan or dissolution order by the Adjudicating Authority.

The IBBI clarified that this directive has been issued under Section 196 of the Insolvency and Bankruptcy Code, 2016, empowering the Board to issue necessary guidelines for the proper conduct of insolvency proceedings.

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