The Insolvency and Bankruptcy Board of India (IBBI), through its Circular No. IBBI/CIRP/83/2025, has directed all Insolvency Professionals (IPs), Insolvency Professional Entities, and Insolvency Professional Agencies to ensure robust disclosure of carry forward losses in the Information Memorandum (IM) under the Corporate Insolvency Resolution Process (CIRP).
The amendment to Regulation 36 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 mandates that IPs provide a dedicated section in the IM explicitly detailing the carry forward of losses as per the Income Tax Act, 1961. The disclosure must include:
The quantum of carry forward losses available to the corporate debtor.
A breakdown of losses under specific heads as per the Income Tax Act, 1961.
The applicable time limits for utilizing such losses.
Explicit clarification if no carry forward losses are available.
The IBBI observed that existing IMs lacked sufficient clarity regarding carry forward losses, which are crucial for potential resolution applicants in assessing the financial viability and tax benefits associated with a corporate debtor. This enhanced disclosure framework aims to ensure that resolution plans are better informed and commercially viable.
This directive has been issued under Section 196 of the Insolvency and Bankruptcy Code, 2016, reinforcing IBBI’s commitment to transparency and informed decision-making in the insolvency resolution process.
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