The Insolvency and Bankruptcy Code Amendment Bill, passed by the Rajya Sabha in 2025, includes cross-border insolvency frameworks, group insolvency, and 180-day liquidation timelines, enabling cross-border and group insolvency, and introducing CIIRP to reduce delays and ease court burden.
The Insolvency and Bankruptcy Code is an Amendment Bill passed in 2025 by the Rajya Sabha. It includes cross-border insolvency frameworks, group insolvency and 180-day liquidation timelines. It also tackles judicial bottlenecks, introduces the creditor-initiated insolvency resolution process and enhances CoC powers over liquidation to improve recovery rates.
What is Insolvency and Bankruptcy Code Amendment Bill?
The Insolvency and Bankruptcy Code is an Amendment Bill passed in 2025 by the Rajya Sabha 2025. It is an update to India's 2016 insolvency law to accelerate resolution, reduce NCLT delays to 14 days and introduce group cross border frameworks. It enhances creditor control, improves recovery value and aligns with international best practices. It establishes a framework aligned with UNCITRAL model laws to handle foreign assets and foreign creditors more efficiently.
Which Issues Associated with Insolvency and Bankruptcy Code Amendment Bill?
The Insolvency and Bankruptcy Code Amendment faces several challenges, including risks of mandatory admission, capacity bottlenecks, and concerns over overriding judicial precedents set by the Supreme Court. Let’s examine the key issues associated with the Insolvency and Bankruptcy Code Amendment Bill:-
1. Mandatory Admission Risks
The bill removes judicial discretion by forcing NCLT to admit cases immediately upon establishing default, which could lead to malicious or premature filings. By removing discretion, the insolvency and bankruptcy code amendment may motivate creditors to use the insolvency process as a recovery tool rather than for resolution.
2. Capacity Bottlenecks
Now there are ambitious and stricter timelines such as 14 days for admission. Also there are 180 days for liquidation which are considered unfeasible due to current NCLT backlogs and a shortage of qualified insolvency professionals.
3. Litigation and Interpretation Conflicts
Despite aiming to reduce litigation, the new Insolvency & Bankruptcy Code Amendment Bill may create new legal ambiguities, specifically regarding the two-stage approval of resolution plans. The amendments explicitly rank financial securities higher than statutory debts to settle disputes around priority.
4. Overriding Judicial Precendents
By nullifying rulings like Vidarbha Industries which allows assessment of financial health and Rainbow Papers, the bill creates massive uncertainty and requires a return to strict statutory priority that could create commercial unfairness.
Features of Insolvency and Bankruptcy Code Amendment Bill
The Insolvency and Bankruptcy Code features India’s insolvency framework by introducing withdrawal of applications, cross border insolvency and tightened timelines. Let’s take a look at the features of insolvency and bankruptcy code amendment bill:-
1. Creditor-Initiated Insolvency Resolution Process
The amendment introduced a creditor initiated insolvency resolution process which a new, faster and hybrid framework allowing specified financial creditors to initiate insolvency without initial NCLT approval.
2. Group and Cross Border Insolvency
The amendment introduces statutory frameworks for handling insolvencies of interconnected company groups together and enables. Now for the first time, there are rules for dealing with cross-border insolvency cases.
3. Withdrawal of Applications
The amendment allows for the withdrawal of insolvency applications through 90% CoC approval only after the Indian constitution of the CoC and before the first invitation for resolution plans.
4. Tightened Timelines and NCLT Admissions
The amendment mandates NCLT to admit applications within 14 days upon proof of default. It also establishes a 30-day deadline for approving resolution plans and a 180 day deadline for liquidation.
5. Enhanced Role for CoC in Liquidation
The amendment allows transfers of the supervisory role over the liquidation process from the Stakeholders Consultation Committee to the Committee of Creditors. Also, the CoC can replace the liquidator with a 66% vote.
Significance of Insolvency and Bankruptcy Code Amendment Bill
The Insolvency and Bankruptcy Code has many significance such as creditor initiated resolution, faster resolution & reduced days and decriminalisation. Let’s take a look at the significance of insolvency and bankruptcy code amendment bill:-
1. Faster Resolution and Reduced Delays
The amendment mandates strict timelines such as 14 days for NCLT admission and reduces legal bottlenecks to speed up the insolvency process. Faster resolution and reduced delays are critical objectives across various sectors of indian economy.
2. Creditor Initiated Resolution
The amendment introduces a new, out-of-court initiation model known as creditor initiated reallowing financial creditors with 51% consent to initiate insolvency directly, accelerating the process. The process must be completed within 150 days, with a potential 45-day extension.
3. Increased Creditor Control and Asset Management
The Committee of Creditors gains enhanced supervisory powers over liquidation, moving away from liquidator autonomy. It allows for the transfer of a guarantor’s asset during the corporate debtor's CIRP.
4. Decriminalization and Deterrence
The amendment bill focuses on civil penalties over criminal ones for procedural violations, while penalizing frivolous or frustrating filings to reduce misuse. It also aims to fundamentally restructure the Indian insolvency framework by focusing on speeding up resolutions. Important amendments of the Indian Constitution, such as the 42nd amendment of Indian constitution, 44th, and 73rd Amendments have significantly shaped the country’s governance, democracy, and federal structure over time.
5. Creditor Initiated Resolution
Introduces a new, out-of-court initiation model allowing financial creditors with 51% consent to initiate insolvency directly, accelerating the process. It targets faster resolution within 150 days which is extendable by 45 days.
Conclusion
The Insolvency and Bankruptcy Code is an Amendment Bill passed in 2025 by the Rajya Sabha 2025. It aims to strengthen India’s insolvency framework by introducing withdrawal of applications, cross border insolvency and tightened timelines. Now, the Committee of Creditors has a supervisory role over the liquidation process from the Stakeholders Consultation Committee which gives it more power. However there are many challenges such as overriding judicial precedents, litigation and interpretation conflicts, capacity bottlenecks and mandatory admission risk.