ED arrests insolvency Resolution Professional on money laundering charge

A former Resolution Professional (RP) has been arrested by the ED under the anti-money laundering law on charges of misusing the insolvency and bankruptcy framework, leading to a loss worth crores of rupees to public sector banks, the federal probe agency said.

Arvind Kumar, the RP for a company under insolvency named Richa Industries Ltd., was taken into custody on February 3.

A special Prevention of Money Laundering Act (PMLA) court in Gurugram sent him to 8 days of the agency’s custody, the Enforcement Directorate said in a statement issued on Thursday.

It said the Insolvency and Bankruptcy Board of India (IBBI) had recently suspended the registration of the RP for two years on “related” contraventions.

An RP is appointed to conduct the insolvency resolution process and manages negotiations between the creditors and debtors of the company under the corporate insolvency and resolution process (CIRP). The case pertains to an alleged bank fraud of Rs 236 crore between 2015 and 2018 perpetrated by the accused company and its promoters.  The company (Richa Industries) later went into bankruptcy and Kumar worked as its RP between December 2018 and June 2025.

The ED alleged Kumar undertook “personal enrichment” by establishing his “direct and active” involvement in money laundering.

“During his tenure as Resolution Professional, substantial funds from Richa Industries were diverted through layered transactions to individuals and entities closely connected to him, including associates and employees linked to his own business interests.

“Large payments were routed from the corporate debtor’s accounts to these intermediaries, who then transferred significant amounts back to Arvind Kumar’s personal bank accounts,” the ED said.

Bank records show “unexplained” cash deposits of more than Rs 80 lakh in Kumar’s personal accounts during the period of his appointment, along with credits of over Rs 1 crore received from his related parties who had earlier been beneficiaries of payments from the company, the agency added.

“Above findings state that the arrested RP was a beneficiary of the proceeds of crime generated from the original bank fraud, projecting illicit funds as legitimate receipts under the guise of CIRP-related operations,” it claimed.

It said the RP’s act of orchestrating a “pro-promoter” conspiracy resulted in 94 per cent loss to the banks as they only got Rs 40 crore against the admitted claims of Rs 708 crore after the company was liquidated.

“Such alleged misuse of the insolvency framework not only defeats the objectives of creditor recovery and corporate revival but also undermines public confidence in the financial and insolvency systems.

“The investigation is ongoing to trace the full flow of funds and identify all involved parties,” the ED said.