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Navigating the Corporate Landscape: Transaction Audits under Insolvency & Bankruptcy Code, 2016 with Pipara & Co LLP

Transaction audit under IBC

The Insolvency & Bankruptcy Code, 2016 (“IBC”) is a comprehensive legal framework that allows Resolution Professionals to assist financially distressed companies by either facilitating their orderly winding up or crafting revival plans for future operations. In this context, Resolution Professionals work at maximizing the value of the debtor’s assets and safeguarding the interests of stakeholders, all within the timeframes specified by the IBC. This is where Pipara & Co LLP, a leading firm of Chartered Accountants in Ahmedabad, steps in. We offer comprehensive Transaction Audits under the Insolvency and Bankruptcy Code (IBC), 2016, ensuring a smooth and transparent process for Resolution Professionals all over India.

What are Transaction Audits under IBC?

The Resolution Professional under Regulation 35A (1) of IBC, 2016 shall form an opinion whether the Corporate Debtor has subjected any transactions u/s 43, 45, 49, 50 & 66 on or before 75th day of CIRP

Transaction Auditor may be appointed to support the opinion of the Resolution Professional (RP), who have to file avoidance of specified transactions with the Adjudication Authority. Such specific transactions may include preferential, undervalued, extortionate credit and fraudulent or wrongful transactions carried out with an intent to defraud creditors.

The following are the relevant sections relating to Transaction Audit under the IBC:

(I) Section 43- Preferential Transactions

A corporate debtor shall be deemed to have given a preference, if—

(a)there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor; and

(b)the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with Section 53.

Relevant period:

  • A preference shall be deemed to be given at a relevant time, if—
  • It is given to a related party, during the period of two years preceding the insolvency commencement date; or
  • A preference is given to a person other than a related party during the period of one year preceding the insolvency commencement date.

This shall include identification of loans and advances repaid during the review period and comparison with payments made to secured lenders, assets transferred, analysis of inter debtor creditor adjustments, diversion of money

(II) Section 45- Undervalued transactions

A transaction shall be considered undervalued where the corporate debtor —

(a)makes a gift to a person; or

(b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor.

Relevant period is same as prescribed for Preferential Transactions.

(III) Transaction defrauding creditors under Section 49

Where the corporate debtor has entered into an undervalued transaction as referred to in sub-section (2) of section 45 and the Adjudicating Authority is satisfied that such transaction was deliberately entered into by such corporate debtor—

(a) for keeping assets of the corporate debtor beyond the reach of any person who is entitled to make a claim against the corporate debtor; or

(b) in order to adversely affect the interests of such a person in relation to the claim,

(IV) Section 50-Extortionate credit transactions

A transaction shall be considered an extortionate credit transaction under section 50(2) where the terms-

(a)require the corporate debtor to make exorbitant payments in respect of the credit provided; or

(b) are unconscionable under the principles of law relating to contracts.

Relevant period

Two years preceding the insolvency commencement date.

(V) Section 66- fraudulent trading or wrongful trading

If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit.

Why Choose Pipara & Co LLP for Transaction Audits?

Pipara & Co LLP, with a team of experienced Chartered Accountants, offers unparalleled expertise in Transaction Audits under IBC. Here’s what sets us apart:

  • Deep Understanding of IBC:Our team stays updated on the latest amendments and nuances of the IBC, ensuring our audits are comprehensive and compliant with evolving regulations.
  • Meticulous Approach:We conduct a thorough review of the Corporate Debtor’s Bank statements, Books of accounts, Analysis of Public domain data, financial statements, legal documents, and operational processes, tracing all the Receipts & payments leaving no stone unturned.


  • Client-Centric Focus:We understand your assignment goals and tailor our audit approach to address your specific concerns and provide valuable insights.
  • Thorough Investigation:We help you effectively determine any alteration of books of accounts and records, willful concealment or removal of any property.

Pipara & Co LLP: Your Trusted Partner in Growth

At Pipara & Co LLP, we believe in fostering a collaborative and transparent client relationship. We work closely with you to understand your specific needs and objectives for the transaction. Our experienced Chartered Accountants in Ahmedabad will deliver a comprehensive Transaction Audit under IBC, equipping you with the necessary financial insights to navigate the complex world of corporate transactions with confidence.

Contact Us Today!

If you are a Liquidator or Resolution Professional, Pipara & Co LLP can be your trusted advisor. Contact us today for a free consultation and discuss how our Transaction Reviews can help ensure a compliance of IBC, 2016.