{"id":31072,"date":"2026-01-24T14:54:03","date_gmt":"2026-01-24T09:24:03","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=31072"},"modified":"2026-01-24T23:12:41","modified_gmt":"2026-01-24T17:42:41","slug":"strengthening-due-diligence-under-section-29a-ibc","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/","title":{"rendered":"Strengthening Due Diligence under Section 29A \u2013 IBC"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69ee00bd1c105\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" 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href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#Strengthening_Due_Diligence_under_Section_29A_%E2%80%93_IBC\" title=\"Strengthening Due Diligence under Section 29A \u2013 IBC \">Strengthening Due Diligence under Section 29A \u2013 IBC <\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#What_Section_29A_Covers\" title=\"What Section 29A Covers\">What Section 29A Covers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#IBBI_Circular_Explained_Guidance_to_Strengthening_Due_Diligence_Us_29A\" title=\"IBBI Circular Explained Guidance to Strengthening Due Diligence U\/s 29A \">IBBI Circular Explained Guidance to Strengthening Due Diligence U\/s 29A <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#Key_Compliance_Responsibilities_Re%E2%80%91Emphasized_in_Due_Diligence_Us_29A_of_the_IBC\" title=\"Key Compliance Responsibilities Re\u2011Emphasized in Due Diligence U\/s 29A of the IBC \">Key Compliance Responsibilities Re\u2011Emphasized in Due Diligence U\/s 29A of the IBC <\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#The_circular_summarizes_duties_already_present_in_the_Code_and_Regulations\" title=\"The circular summarizes duties already present in the Code and Regulations:\">The circular summarizes duties already present in the Code and Regulations:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#Why_IBBI_Emphasized_This_Now\" title=\"Why IBBI Emphasized This Now\">Why IBBI Emphasized This Now<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#Section_29A_Compliance_Note_for_Prospective_Resolution_Applicant\" title=\"Section 29A Compliance Note for Prospective Resolution Applicant\">Section 29A Compliance Note for Prospective Resolution Applicant<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#Practical_Checklist_for_Section_29A_Due_Diligence\" title=\"Practical Checklist for Section 29A Due Diligence\">Practical Checklist for Section 29A Due Diligence<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/strengthening-due-diligence-under-section-29a-ibc\/#A_concise_29A_Due_Diligence_Report_should_include\" title=\"A concise 29A Due Diligence Report should include:\">A concise 29A Due Diligence Report should include:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Strengthening_Due_Diligence_under_Section_29A_%E2%80%93_IBC\"><\/span><span style=\"color: #000080;\"><strong>Strengthening Due Diligence under Section 29A \u2013 IBC <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"What_Section_29A_Covers\"><\/span><span style=\"color: #000080;\"><strong>What Section 29A Covers<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Section 29A requires Section 29A list of persons who are not eligible to submit a resolution plan includes NPA defaulters, willful defaulters, connected people, those convicted of certain offenses, guarantors to the same corporate debtor, etc. People not eligible to submit a resolution plan include:<\/p>\n<ul>\n<li>NPA defaulters<\/li>\n<li>Willful defaulters<\/li>\n<li>Connected persons<\/li>\n<li>Certain convicted persons<\/li>\n<li>Guarantors to the same corporate debtor, etc.<\/li>\n<\/ul>\n<p>Section 29A ineligibility is one of the most litigated issues in CIRP, often leading to delays, failed plans, and RP accountability questions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"IBBI_Circular_Explained_Guidance_to_Strengthening_Due_Diligence_Us_29A\"><\/span><span style=\"color: #000080;\"><strong>IBBI Circular Explained Guidance to Strengthening Due Diligence U\/s 29A <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The Insolvency and Bankruptcy Board of India has issued a circular to tighten and formalize the due\u2011diligence responsibilities of Resolution Professionals (RPs) regarding the eligibility of Prospective Resolution Applicants (PRAs) under Section 29A of the IBC. This is crucial because Section 29A ineligibility is one of the most litigated areas in CIRP.<\/li>\n<li>The IBBI has issued a circular re-emphasizing and tightening the due diligence responsibilities of Resolution Professionals (RPs) while verifying the eligibility of Prospective Resolution Applicants (PRAs) under Section 29A of the IBC.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Key_Compliance_Responsibilities_Re%E2%80%91Emphasized_in_Due_Diligence_Us_29A_of_the_IBC\"><\/span><span style=\"color: #000080;\"><strong>Key Compliance Responsibilities Re\u2011Emphasized in Due Diligence U\/s 29A of the IBC <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h4><span class=\"ez-toc-section\" id=\"The_circular_summarizes_duties_already_present_in_the_Code_and_Regulations\"><\/span><span style=\"color: #000080;\"><strong>The circular summarizes duties already present in the Code and Regulations:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li>Regulation 36A(4) : Form G must explicitly mention Section 29A ineligibility criteria.<\/li>\n<li>Regulation 36A(7) : Every PRA must submit an undertaking along with an EOI confirming they are not ineligible.<\/li>\n<li>Section 30 &amp; Regulation 39 : The final resolution plan must contain an affidavit affirming Section 29A eligibility.<\/li>\n<li>Regulation 36A(8) : The Resolution Professionals must perform independent due diligence to verify 29A compliance. This is the most critical responsibility and the focus of the circular.<\/li>\n<li>Compliance Certificate \u2013 Form H : Resolution Professionals must give in his Due Diligence U\/s 29A which confirmation that the affidavit is in order &amp; A due diligence certificate verifying Section 29A eligibility<\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Why_IBBI_Emphasized_This_Now\"><\/span><span style=\"color: #000080;\"><strong>Why IBBI Emphasized This Now<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li>Due diligence on Section 29A has frequently been found inadequate, leading to litigation before CoC voting, challenges before NCLT\/NCLAT\/Supreme Court, delays and plan failures, &amp; questions on RP accountability. The circular explicitly states that this due diligence is \u201cparamount\u201d to preserve transparency, the integrity of CIRP, and the legal sustainability of approved plans.<\/li>\n<li>The new mandatory requirement of resolution professionals under resolution professionals must now place a \u201cdetailed note on Section 29A compliance\u201d before the CoC.<\/li>\n<li>This note should Summarize documents submitted by each PRA, Detail verification steps taken by RP, highlight any red flags or unresolved issues, reflect interactions with PRAs &amp; Indicate reliance on public records, MCA filings, credit reports, court orders, databases, etc.<\/li>\n<li>Moreover, CoC deliberations must be properly recorded in minutes. This creates a documented trail showing that RP verified eligibility, CoC consciously evaluated it, Any concerns were discussed. This documentation becomes critical if the plan is challenged later.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Section_29A_Compliance_Note_for_Prospective_Resolution_Applicant\"><\/span><span style=\"color: #000080;\"><strong>Section 29A Compliance Note for Prospective Resolution Applicant<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The practical auditor and RP must take care of the strengthening due diligence under Section 29A of the IBBI regulation. We can Use for the 29A Compliance Note: the following below points must be is a concise 29A Due diligence report.<\/p>\n<ul>\n<li>29A Due diligence must have the applicant details in his reporting. The report must include the list of documents to be submitted to auditors undertaking under Regulation 36A(7), the affidavit under Section 30, net worth\/financial statements, shareholding structure, related party declarations, credit reports, and Court orders (if applicable).<\/li>\n<li>Following Verification Actions Taken by RP like MCA Master Data checks, NPA status verification from lenders, Willful defaulter lists (RBI), SEBI debarment lists, Public litigation search, CIRP\/Liquidation records &amp; Cross\u2011reference of &#8220;connected persons&#8221;<\/li>\n<li>The auditor must make all the observations\/red flags in his 29A Due diligence report. Conclusion on Eligibility\u2014What This Means for Insolvency Professionals: As a practitioner, this circular increases the documentation burden, liability for inadequate verification, and importance of detailed minutes. However, it also Strengthens the defensibility of the process, reduces post\u2011plan litigation risk, protects you (the RP) by showing robust compliance<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Practical_Checklist_for_Section_29A_Due_Diligence\"><\/span><span style=\"color: #000080;\"><strong>Practical Checklist for Section 29A Due Diligence<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"A_concise_29A_Due_Diligence_Report_should_include\"><\/span><span style=\"color: #000080;\"><strong>A concise 29A Due Diligence Report should include:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>Applicant Details &amp; Documents<\/strong><\/span><\/p>\n<ul>\n<li>Undertaking under Reg. 36A(7)<\/li>\n<li>Affidavit under Section 30<\/li>\n<li>Net worth &amp; financial statements<\/li>\n<li>Shareholding &amp; related-party disclosures<\/li>\n<li>Credit reports<\/li>\n<li>Court orders (if any)<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Verification Actions by RP<\/strong><\/span><\/p>\n<ul>\n<li>MCA Master Data checks, NPA status with lenders<\/li>\n<li>RBI willful defaulter lists<\/li>\n<li>SEBI debarment lists<\/li>\n<li>Public litigation search<\/li>\n<li>CIRP \/ liquidation history<\/li>\n<li>Cross-verification of \u201cconnected persons\u201d<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Key Compliance Duties Re-emphasised<\/strong><\/span><\/p>\n<ul>\n<li>Regulation 36A(4) \u2013 Form G must clearly mention Section 29A ineligibility<\/li>\n<li>Regulation 36A(7) \u2013 PRA to submit an undertaking with EOI<\/li>\n<li>Section 30 &amp; Regulation 39 \u2013 Affidavit confirming Section 29A eligibility with the Resolution Plan<\/li>\n<li>Regulation 36A(8) \u2013 RP must perform independent due diligence (most critical)<\/li>\n<li>Form H (Compliance Certificate) \u2013 RP must certify that Section 29A due diligence has been properly carried out<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>New Mandatory Requirement for RPs<\/strong><\/span><\/p>\n<p>RPs must now place a detailed Section 29A Compliance Note before the CoC, covering:<\/p>\n<ul>\n<li>Documents submitted by each PRA<\/li>\n<li>Verification steps taken by RP<\/li>\n<li>Red flags or unresolved issues<\/li>\n<li>Reliance on public records (MCA, RBI, SEBI, credit reports, court orders, databases)<\/li>\n<li>Proper recording of CoC deliberations in minutes<\/li>\n<\/ul>\n<p>This creates a clear audit trail, crucial if the plan is challenged before NCLT\/NCLAT\/Supreme Court.<\/p>\n<p><span style=\"color: #000080;\"><strong>Observations &amp; Conclusion <\/strong><\/span><\/p>\n<p>In the 29A DD report must Clear identification of red flags &amp; conclusion on eligibility under Section 29A.\u00a0Under this IBBI circular This Means for Insolvency Professionals: Yes, this increases Documentation burden, Verification responsibility &amp; RP accountability But it also Strengthens process defensibility, reduces post-approval litigation &amp; Protects the RP through robust compliance evidence<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Strengthening Due Diligence under Section 29A \u2013 IBC What Section 29A Covers Section 29A requires Section 29A list of persons who are not eligible to submit a resolution plan includes NPA defaulters, willful defaulters, connected people, those convicted of certain offenses, guarantors to the same corporate debtor, etc. People not eligible to submit a resolution &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10012],"tags":[10416],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31072"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=31072"}],"version-history":[{"count":1,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31072\/revisions"}],"predecessor-version":[{"id":31073,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31072\/revisions\/31073"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=31072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=31072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=31072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}