ED flags bankruptcy code frauds, ‘disproportionate’ haircuts as thrust areas

ED flags bankruptcy code frauds, 'disproportionate' haircuts as thrust areas According to the agency, it identified recurring malpractices including circumvention of Section 29A, inflation of related-party claims, manipulation of the Committee of Creditors, asset stripping and artificially large haircuts through which promoters.

Key points

• 6 min read New Delhi Sep 16, 2026 04: 42 AM IST.
• "Unearthing frauds under the Insolvency and Bankruptcy Code and the PMLA (Prevention of Money Laundering Act)" headed the list.
• Section 29A of the IBC prohibits defaulting promoters, wilful defaulters, and connected/ related parties from bidding for their own firm during insolvency.
• On September 1, a five-member special bench of the NCLT stayed the settlement order.

Red-flagging frauds under the Insolvency and Bankruptcy Code (IBC), the Enforcement Directorate (ED) has identified "re-examination of collusive resolution cases involving dis­p­r­o­p­ortionately large haircuts through which promoters re-acquire assets" as a key thrust area.

This comes in the backdrop of the National Firm Law Tribunal's (NCLT) August 25 order which allowed Essel Group founder Subhash Chandra to settle his personal insolvency proceedings by paying Rs 6.25 crore, against admitted claims of Rs 22, 006.57 crore. On September 1, a five-member special bench of the NCLT stayed the settlement order.

In an official note, the ED listed the identification of some "core operational thrust areas" at its 36th Quarterly Conference of Zonal Officers (QCZO), held at the Indian Institute of Management, Bengaluru, on September 14-15. "Unearthing frauds under the Insolvency and Bankruptcy Code and the PMLA (Prevention of Money Laundering Act)" headed the list.

Taken together, the developments around ED flags bankruptcy code frauds, 'disproportionate' haircuts as thrust areas point to a situation that is still moving, and the coming days should bring more clarity.