The Insolvency and Bankruptcy Board of India (IBBI) on August 14, 2026, issued a Discussion Paper - Guidance to Insolvency Professionals for Due Diligence to Identify Fraudulent or Malicious Initiation of Corporate Insolvency Resolution Process, and Recourse under Sections 60(5) and 65 of the Insolvency and Bankruptcy Code, 2016.
The following has been stated: -
•The IBBI proposes to strengthen the integrity of the Corporate Insolvency Resolution Process (CIRP) by addressing its fraudulent or malicious initiation under Section 65 of the IBC.
•Insolvency Professionals (IPs) have a non-delegable duty to identify and report indicators of such misuse, based on their statutory responsibilities and professional conduct requirements.
•The Board has observed inconsistent examination and escalation of such cases, potentially delaying action under Section 65.
•Accordingly, IBBI proposes a circular consolidating existing provisions and providing an illustrative list of indicators and available remedies under Sections 60(5) and 65.
•Stakeholders are invited to submit comments on the draft circular electronically by August 24, 2026.
The detailed circular is given in the document below.
