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The Government of India has taken a big step which can pave the way for recovery of billions of rupees stuck in the cases of bankrupt companies. Now, even if the assets of a company have been seized by the Enforcement Directorate (ED) under money laundering charges, the Resolution Professional (RP) will still be able to sell or use them, provided an undertaking is given in the court that the promoters will not benefit from these assets. This new circular has been issued by IBBI on November 4, 2025, which resolves the long-standing legal conflict between PMLA and IBC.
New DelhiED and Insolvency and Bankruptcy Board of India (IBBI) have jointly introduced a system which is expected to benefit flat buyers the most. This will benefit those people who are customers of companies stuck in the bankruptcy process. Now ED has made it easier for the companies involved in the bankruptcy process to release the seized properties.
Now the assets attached under the Anti Money Laundering Act (PMLA) can be used in the ongoing process under the Insolvency and Bankruptcy Code (IBC). This will provide great help to banks, investors and homebuyers in recovering their stuck money.
What is the whole matter?
Suppose, a company is in debt and comes under the IBC process. During this time, a resolution professional (RP) tries to repay the loan by selling the company or making a new financial plan. But if a case of money laundering (PMLA) is pending against the company or its promoters, then the ED seizes the assets of the company like land, factory, bank balance or shares. The result is that the entire IBC process comes to a halt. The assets cannot be sold as they are “frozen”. Its direct impact is on banks, investors and homebuyers. Banks do not get back their loans worth crores of rupees. Homebuyers are left stuck waiting for their homes. Investors’ capital sinks. In many such cases, court cases continued for years, due to which recovery came to a standstill.
Joint initiative of ED and IBBI
To solve this serious problem, ED and IBBI together created a Standard Operating Procedure (SOP). After the meetings that started in October 2025, IBBI issued a new circular on 4 November 2025. Now the Resolution Professional (RP) can approach the Special PMLA Court and apply for the release of assets under Section 8(7) and 8(8) of PMLA. The RP will have to file a standard undertaking clearly stating that “the released assets will be utilized only for the benefit of the creditors and stakeholders and not for the promoters of the company or the accused persons.” ED will keep an eye on this entire process. Even after the assets are released, reporting, audit and compliance requirements will remain in place to maintain transparency.
Who will get the most benefit?
Three major sections will get direct benefits from this decision
- Banks and Financial Institutions – Now the loan can be recovered by selling the seized properties. This will speed up many old cases going on under IBC.
- Homebuyers and investors – Under RERA, the problems of real estate companies like stuck projects will be resolved quickly.
- Overall System – Now it will be easier to comply with the IBC deadline of 180–330 days. Cases pending in the court will reduce and strictness will also be maintained on economic crimes.
- ED has clearly said that “the strictness of PMLA and the value recovery of IBC are not opposites, but complement each other.” This step will not only make the system transparent but will also protect public interest.
