ED Relaxes PMLA Asset Rules To Boost Recovery Under Insolvency Law

The Enforcement Directorate (ED) has taken steps to expedite the resolution of companies under the Insolvency and Bankruptcy Code (IBC) by allowing the release of assets previously attached under the Prevention of Money Laundering Act (PMLA). The move is aimed at maximizing value for creditors, including banks and homebuyers, the central agency said on Wednesday. 

In several insolvency cases, assets of corporate debtors remained under PMLA attachment, restricting their use in the resolution process. To address this challenge, the ED held multiple coordination meetings with the Insolvency and Bankruptcy Board of India (IBBI) to establish a standard mechanism for restitution of attached assets during corporate insolvency resolution or liquidation.

Following these discussions, the IBBI issued a circular on November 4, 2025, providing a framework for the release of such assets. Under the new system, Resolution Professionals can approach the court to release assets under Sections 8(7) and 8(8) of PMLA. The circular also includes a standard undertaking to ensure that released assets are used solely for the benefit of creditors, preventing any advantage to accused promoters.

The ED emphasized that strict enforcement under PMLA and value maximization under IBC are complementary objectives. Officials noted that the initiative ensures economic offenders face prosecution while safeguarding creditors’ interests through lawful resolution of assets. The simplified mechanism is expected to facilitate faster resolution of pending cases and reduce litigation delays.