New Delhi, Sept. 11 -- The Insolvency and Bankruptcy Board of India (IBBI) has directed insolvency professionals (IPs) to remain vigilant and conduct due diligence where circumstances suggest that the insolvency process may be misused for purposes other than resolution or liquidation of a corporate debtor.

In a September 9, 2026, circular issued under Section 196 of the Insolvency and Bankruptcy Code (IBC), 2016, the regulator said it had received information from law enforcement and regulatory agencies about instances of the IBC allegedly being used to mitigate tax liabilities, avoid regulatory scrutiny, investigations or penalties, and monetise or ring-fence assets.

IBBI Lists Red Flags

The IBBI identified several indicators that IPs...