IBC Amendment Bill 2025 proposes faster, broader insolvency processes

The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, tabled in Parliament, seeks to overhaul the IBC framework with provisions for creditor-initiated insolvency, domestic group insolvency, cross-border proceedings, and faster resolution timelines.

To address long delays, currently averaging over 434 days versus the mandated 14, the Bill amends Section 7 to ensure financial creditor applications are admitted solely on proof of default, with information utility records deemed sufficient evidence.

This aims to reduce value erosion for debtors.

The Bill expands the definition of resolution plans, restricts the corporate applicant’s role in appointing resolution professionals, clarifies government dues priority, and limits withdrawal of insolvency applications after key stages.

It introduces timelines for plan approvals, statutory recognition of monitoring committees, and stronger provisions against avoidance, wrongful, and fraudulent transactions.

For liquidation, the committee of creditors will get greater oversight powers, including replacing liquidators and recommending direct dissolution for negligible-asset companies. CIRP can be restored once during liquidation to rescue viable firms.

The new Creditor-Initiated Insolvency Resolution Process (CIIRP) allows select financial institutions to initiate insolvency outside court, with oversight from a resolution professional and a 150-day resolution target.

A new Group Insolvency chapter empowers the government to frame rules for coordinated proceedings among related companies, while cross-border provisions will enable a dedicated bench for foreign-linked cases.

Other measures include tackling misuse by personal guarantors, enabling an electronic IBC portal, decriminalising select actions, and strengthening regulatory capacity.