Supreme Court Exposes Systemic Manipulation in Insolvency Auctions, Orders Investigation into IBC Abuses

In a landmark judicial intervention, the Supreme Court of India has identified and condemned what it describes as systematic exploitation of the Insolvency and Bankruptcy Code (IBC), raising alarms over the integrity of corporate debt resolution. During proceedings involving the Anil Ambani group, a bench led by the Chief Justice of India delivered a scathing critique, stating, 'Unfortunately, IBC proceedings are misused nowadays. The assets of a company in debt are undervalued. Then it is put on a sham auction and, in a planned manner, a family member or a friend buys it.' This judicial observation directly challenges the defense presented by Senior Advocate Mukul Rohatgi, who argued that such sales constitute a public process regardless of the buyer's identity. The Court's directive for a probe signals a critical shift towards enforcing accountability and transparency within the IBC framework, which has been pivotal in India's economic restructuring. This development underscores a pressing need to safeguard the code from predatory practices that undermine creditor rights and distort market fairness, potentially prompting significant regulatory and procedural reforms to restore confidence in the nation's insolvency resolution mechanism.