Archive · 7 Sep 2025
Fund Transfer Crackdown in Personal Insolvency Cases
Imagine people owe money and can't pay.
Before they say they can't pay, some try to hide their money by giving it to family or other places.
The government wants to stop this.
A new rule says that the people who help figure out the debt can now ask a judge to get the money back if they think it was hidden.
This way, the people who are owed money can get it back fairly.
The new rule is part of a bigger bill that's being discussed in government, with the goal of making the process of dealing with debts fairer for everyone.
New rules aim to prevent fund diversion before personal insolvency filings.
Section 164A allows RPs to reclaim "avoidance transactions".
This aims to stop promoters from hiding assets.
The new section empowers authorities to reverse improper transactions.
The IBC Amendments Bill, 2025, is currently with a select committee.
- Who
- Company promoters and personal guarantors.
- What
- New measures to prevent fraudulent fund transfers before personal insolvency.
- When
- Bill introduced in the Lok Sabha.
- Where
- India
- Why
- To prevent debtors from shielding assets and ensure fairer recoveries for creditors.
Creditor Perspective
Debtor Perspective
Fair Asset Recovery
Creditor Perspective
Supports measures to prevent asset shielding and ensure fair recovery for creditors.
Debtor Perspective
May view the measures as restricting asset management prior to declaring insolvency.
- Key Change
- Stricter rules on fund transfers before personal insolvency
- New Section
- 164A introduced in the IBC Amendments Bill, 2025
- Goal
- Prevent fraudulent fund diversion by company promoters
- Mechanism
- Resolution professionals (RPs) can approach NCLT to reverse "avoidance transactions"
- Action
- Adjudicating authority can restore pre-transaction position
- Bill Status
- Introduced in Lok Sabha, referred to select committee
