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of <h1>Directors and Partners Must Contribute to Assets if Fraud or Negligence Found Under Insolvency Rules</h1> During the corporate insolvency resolution or liquidation process, if it is found that the corporate debtor's business was conducted with intent to defraud creditors or for any fraudulent purpose, the Adjudicating Authority may order persons knowingly involved to contribute to the debtor's assets. Additionally, if a director or partner knew or should have known before insolvency that there was no reasonable prospect of avoiding insolvency and failed to exercise due diligence to minimize creditor losses, they may be directed to contribute to the assets. Due diligence is defined as the reasonable care expected from someone performing similar functions. Applications under this provision cannot be filed for defaults where insolvency resolution initiation is suspended under certain conditions.
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