According to the bill, the amendments aim to facilitate faster admission, resolution, and liquidation processes, maximise asset value, and improve governance.
| Photo Credit:
designer491
Amendments in the Insolvency and Bankruptcy Code (IBC) prescribe expeditious admission of Insolvency Applications and recasting the liquidation process for speedier adjudication, besides many others.
On Tuesday, Finance & Corporate Affairs Minister Nirmala Sitharaman introduced the bill in the Lok Sabha, and it was then referred to the Select Committee. The amendments aim to incorporate new concepts such as creditor-initiated insolvency resolution process (CIIRP), enabling provisions for domestic group insolvency and cross-border insolvency, among other changes. According to the bill, these amendments aim to facilitate faster admission, resolution, and liquidation processes, maximise asset value, and improve governance.
To promote expeditious admission of insolvency applications, the Code mandates that insolvency applications be admitted within 14 days; at present an average of over 434 days is taken, leading to considerable value loss for the corporate debtor. To address this situation, Section 7 is being modified to specify that an application for initiating the corporate insolvency resolution process by financial creditors shall be admitted if a default exists, and no other grounds shall be considered for deciding such an application.
“It is also clarified that when an application is made by a financial creditor who is a financial institution, the Adjudicating Authority shall consider records of default from information utilities as sufficient evidence to ascertain the existence of such default. This change will reduce timelines for admitting applications related to financial debt,” the bill said.
Siddharth Srivastava, Partner, Restructuring & Insolvency, Khaitan & Co, said one of the major incidences of delay in the corporate insolvency resolution process has been at the admission stage, which has negatively impacted outcomes. Limiting the adjudicating power of NCLT to admit or reject the application inter alia basis default will provide the necessary impetus for timely outcomes at the first stage itself. “Segmenting approval of the resolution plan into two parts, of implementation and distribution, is again a welcome move, as it prioritises speedy resolution of the distressed entity over inter-creditor disputes,” he said.
Committee of creditors to supervise liquidation
Another new provision relates to recasting the liquidation process for speedier adjudication. The proposed amendments seek to empower the committee of creditors to supervise liquidation, including a provision to replace the liquidator by a 66 per cent vote, and extending the moratorium available under the CIRP to the liquidation process to speed up company dissolution. They allow the Adjudicating Authority to restore the CIRP once on the request of the committee of creditors, enabling potential rescue of viable companies.
“The committee of creditors can also recommend direct dissolution if assets are negligible, and can retain or appoint the Resolution Professional as liquidator. The amendments remove common activities between CIRP and liquidation, to reduce delays in liquidation,” the bill said.
Through the bill, the proposed reforms aim to strengthen the insolvency ecosystem by addressing personal guarantor misuse, enhancing institutional capacity and improving regulatory governance. Key changes include removing the interim moratorium for personal guarantors and introducing a provision to prevent transactions that defraud creditors. Also, an enabling provision for facilitating different processes under the Code for all stakeholders through an electronic portal is provided to enhance efficiency and transparency. In terms of regulatory resources, the Central Government can regulate the use of the IBC Fund and expand IBBI’s regulatory scope. Additionally, decriminalisation of certain actions is proposed, along with a provision empowering the Central Government to resolve any implementation difficulties consistently with the IBC.
Published on August 13, 2025