IBC Amendments Aim to Speed Up Bankruptcy Resolution in India
IBC Amendments Aim to Speed Up Bankruptcy Resolution in India
New bill proposes creditor-led, mostly out-of-court settlements to cut delays in insolvency cases, with a faster 150-day deadline and cross-border provisions.
New Delhi: Finance Minister Nirmala Sitharaman moved the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 in the Lok Sabha, proposing a creditor-initiated framework that largely favors out-of-court settlements to speed up bankruptcy resolution. The amendments also outline faster processes for cross-border and corporate group insolvency. Under the bill, lenders would be able to push informal rescue plans with a majority of unrelated financial creditors and the debtor, while the corporate debtor remains under the supervision of a resolution professional. The National Company Law Tribunal would continue to oversee a moratorium and approve the final plan, but its role would be limited otherwise.
These amendments are the first since 2021 and the seventh since the IBC's 2016 inception. Experts say the changes aim to reduce delays and protect asset value as insolvencies drag on. Data show an average resolution time of 764 days between April and December 2025, up from 597 days as of March 2025, with the current 330-day deadline (including litigation) for resolution. Under the proposed creditor-led framework, a 150-day deadline would govern the informal process, accelerating how quickly rescue plans are put in place.
Under the bill, corporate debtors would continue to run their businesses while facing external oversight by a resolution professional. Lenders would have a choice between the new framework and the existing corporate insolvency resolution process. The amendments emphasize a shift from an adversarial regime to one guided by coordination and governance, with cross-border and corporate group insolvency cases getting dedicated provisions to speed resolution and protect assets.
Parliament's move signals a broader push to improve ease of doing business by reducing delays and litigation burdens on small and mid-sized firms. If enacted, the changes could alter how quickly insolvent companies are rescued and how creditors work together to preserve value.
