Insolvency & transaction audits
Transaction audits under the IBC, built for the NCLT.
We review a corporate debtor’s transactions for preferential, undervalued, fraudulent and extortionate dealings and fund diversion, with findings that support the resolution professional’s determination and application.
- Sections 43, 45, 49, 50 and 66 tested across the look-back periods
- Fund flows, related parties and asset transfers mapped
- Reports structured for the RP’s determination and NCLT application
A senior specialist is available immediately to talk your matter through, before any assignment.
Speak to an expert- Investigations for corporates in India and overseas
- 1,250+Investigations for corporates in India and overseas
- Market intelligence assignments
- 500+Market intelligence assignments
- Years investigating corporate misconduct (since 2007)
- 19+Years investigating corporate misconduct (since 2007)
- Countries where we have investigated
- 11+Countries where we have investigated
Exhibit · SF-CTA
Forensic transaction audit in CIRP
- Handling
- Strictly confidential
- First contact
- Senior specialist
- Evidence
- Chain of custody
- Coverage
- India & 11+ countries
In short
A forensic transaction audit in CIRP reviews the corporate debtor’s past transactions for avoidance transactions under the Insolvency and Bankruptcy Code (preferential, undervalued, extortionate and fraudulent dealings, often called PUFE) and for fund diversion. It supports the opinion and determination the resolution professional must form under regulation 35A of the CIRP Regulations before applying to the NCLT. Spectra Forensics delivers findings with the evidence for each transaction.
Talk it through with a senior specialistWhen clients call us
What a transaction audit looks for
Preferential transactions (s. 43)
Payments or transfers that put a creditor or related party ahead of others.
Undervalued transactions (s. 45)
Assets sold or transferred for significantly less than their value.
Transactions defrauding creditors (s. 49)
Undervalued deals entered into to put assets beyond creditors’ reach.
Extortionate credit (s. 50)
Credit on terms that are grossly unfair to the debtor.
Fraudulent or wrongful trading (s. 66)
Business carried on to defraud creditors, or continued when insolvency was unavoidable.
Diversion of funds
Loan money routed to group entities, promoters or associates.
Guide
What you need to know
What are avoidance transactions under the IBC?
The Insolvency and Bankruptcy Code 2016 allows certain transactions to be challenged and reversed: preferential transactions (section 43), undervalued transactions (section 45), transactions defrauding creditors (section 49), extortionate credit transactions (section 50) and fraudulent or wrongful trading (section 66). The NCLT can reverse or modify them and order contributions, so value taken out returns to creditors.
What are the deadlines for the resolution professional?
Under regulation 35A of the CIRP Regulations, the resolution professional must form an opinion on whether the corporate debtor has been subjected to such transactions by day 75 of the insolvency commencement date, make a determination by day 115, and apply to the NCLT by day 135. A transaction auditor is commonly appointed early to meet them.
What records are needed?
Accounting data, bank statements, contracts, board minutes, related-party registers and asset registers for the look-back periods. Where the former management does not cooperate, bank records and third-party sources fill gaps.
- Transaction audit report
- Schedule of potential avoidance transactions by section
- Fund-flow and related-party analysis
- Evidence bundle to support the RP’s application
What to expect
What happens after you get in touch
- 01
Consult a senior specialist
A senior specialist is available immediately to listen to what has happened and talk through your options, before any assignment. No names or documents are needed at this stage.
- 02
A proportionate scope
We suggest the right next step, from a preliminary review to a full engagement, with the team, approach and fee basis agreed before work starts.
- 03
Evidence first, discreetly
Work starts by securing records, devices and data before anyone connected to the matter is alerted.
- 04
Findings you can act on
A clear, evidence-backed report for your board, lender, counsel or regulator, with support for the next legal, disciplinary or commercial step.
Why Spectra Forensics
Independent, discreet, evidence-led
Frequently asked questions
What is a PUFE audit?
Shorthand for a review of preferential, undervalued, fraudulent and extortionate transactions under the IBC, also called a transaction audit or forensic audit in CIRP.
Who appoints the transaction auditor?
Usually the resolution professional, often with the committee of creditors’ approval of the cost.
Can findings support recovery from directors?
Yes. Applications under section 66 can make directors personally contribute where fraudulent or wrongful trading is established.
Do you also trace where the money went?
Yes. Fund-flow analysis and asset tracing identify recipients and assets for recovery.
What are the look-back periods for PUFE transactions?
Preferential and undervalued transactions are examined for two years before the insolvency commencement date where a related party is involved, and one year otherwise. Extortionate credit transactions are examined for two years. Transactions defrauding creditors (section 49) and fraudulent or wrongful trading (section 66) are not limited to a fixed look-back period.
Speak to us in confidence