New IBC Bill: 7 key amendments that distinguish it from existing law

Amid uproar by the Opposition in Parliament, Finance Minister Nirmala Sitharaman on Tuesday introduced an amended Insolvency and Bankruptcy Code in the Lok Sabha. Among some of the key amendments to the existing bankruptcy law that are incorporated in the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, include a provision enabling a "creditor-initiated insolvency resolution process" with an out-of-court initiation mechanism for genuine business failures, in order to facilitate faster and more cost-effective insolvency resolution.

For starters, the bill aims to reduce delays, maximise value, and improve process governance for all stakeholders, introducing new provisions based on select global best practices for resolving insolvency. Several of its amendments are aimed at accelerating insolvency resolution, maximising  value recovery, improving governance, and enabling efficient group and cross-border insolvencies while introducing more flexibility and fairness to the insolvency process in the country.

Here's a quick take on seven key features of the new IBC Bill: 

1. Faster application process

• Financial creditors' insolvency applications now must be admitted within 14 days, if a default is established
• Information utility records will be accepted as sufficient evidence of default
• No other grounds besides proof of default to delay admission 
• A focus on drastically reducing the current average admission time of more than 434 days to prevent asset value erosion 

2. Better corporate insolvency resolution process (CIRP)

• Resolution plans can now include sale of assets 
• Restriction on the corporate applicant's right to propose the resolution professional to ensure fair appointments 
• A clear prioritisation of government dues 
• A limited withdrawal of insolvency applications post-constitution of the Committee of Creditors (CoC) and after the first call for resolution plans 
• Extended monitoring and enforcement powers, including statutory recognition for a monitoring committee to oversee implementation 
• Recovery enforcement for fraudulent and wrongful trading extended with longer look-back periods 
• A clean slate concept is now enforced to facilitate fresh starts for resolved companies 

3. Speedier and more governed liquidation process

• The Committee of Creditors (CoC) has been empowered to supervise liquidation 
• It can now replace the liquidator with a 66 per cent vote
• The provision for moratorium under CIRP has been extended to the liquidation phase to avoid disruptions
• The CoC is permitted to recommend direct dissolution if assets are negligible
• The liquidator can be the existing resolution professional retained by CoC 
• The Adjudicating Authority has been empowered to restore CIRP once on CoC recommendation for reviving viable companies
• Overlapping activities between CIRP and liquidation have been removed in order to reduce delays 

4. Introduction of creditor-Initiated insolvency resolution process (CIIRP)

• A fast, out-of-court insolvency resolution initiated by select financial creditors
• The corporate debtor’s board continues to operate under oversight by a resolution professional with veto powers 
• A 30-day objection period for corporate debtors 
• If resolution fails in 150 days or the plan is rejected, the process converts into standard CIRP 
• A focus on preserving asset value and achieve quicker resolution with less business disruption 

5. A chapter for group insolvency

• The bill seeks to enable coordinated or combined insolvency proceedings for corporate groups
• There are provisions for a common bench, shared insolvency professionals and coordinated creditor panels
• Inter-company coordination agreements are now enforceable by the Adjudicating Authority 
• The bill is designed to avoid waste and duplication, lower costs, preserve group synergies and improve value maximisation

6. Cross-border insolvency framework

• The bill empowers the central government to prescribe rules for cross-border insolvency
• Dedicated benches will be created for addressing international insolvency cases
• The bill seeks to smoothen, quicken and enhance the predictability of the law in alignment with global standards

7. Other key provisions

• The interim moratorium for personal guarantors has been done away with to prevent misuse
• Stricter rules to prevent fraudulent and avoidance transactions
• Electronic portals have been introduced to increase transparency and reduce procedural delays
• Enhanced regulatory capacity and powers of the Insolvency and Bankruptcy Board of India (IBBI) 
• Decriminalisation of certain minor offences 
• The central government has the authority to resolve implementation challenges consistently