A crucial parliamentary committee's report on a significant amendment to India's insolvency law is set to be presented in the Lok Sabha this Wednesday. This move brings the proposed overhaul of the Insolvency and Bankruptcy Code (IBC) one step closer to becoming law, according to sources familiar with the development.
Committee Adopts Draft, Paving Way for Legislative Action
The select committee, chaired by Bharatiya Janata Party (BJP) Member of Parliament Baijayant Panda, convened and adopted its draft report on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025. Once the report is officially tabled, the Ministry of Corporate Affairs will scrutinize its recommendations. The ministry may then modify the original bill before pushing for its passage in the lower house of Parliament.
Parliament has scheduled the consideration and passing of the amendment bill for the ongoing winter session, which concludes this week. However, it is uncertain if the government will have enough time to navigate the bill through the legislative process in the current session. If not, the bill could be taken up for passage in the subsequent budget session.
Key Reforms Aimed at Speeding Up Corporate Rescue
The proposed amendments represent one of the most substantial revamps of the IBC since its inception in 2016. The core objectives are to make the distressed-assets market more attractive to investors and to significantly reduce delays in corporate turnaround processes.
The bill introduces several key changes, including:
- Faster tribunal admissions for insolvency cases.
- A new creditor-led, out-of-court resolution scheme for quicker corporate rescue.
- A framework for handling insolvency for multiple companies within a group simultaneously.
- The establishment of a formal cross-border insolvency resolution regime.
While the Insolvency and Bankruptcy Board of India (IBBI) has used its regulatory powers to make the debt resolution process more transparent and flexible, major structural changes require legislative action, which this bill seeks to provide.
Industry Hails Focus on Structural Gaps
Experts believe the committee's report will refocus attention on critical issues within the current IBC framework. Amit Maheshwari, Tax Partner at AKM Global, stated, "The tabling of the select committee’s report is expected to bring renewed focus on addressing structural gaps in IBC, particularly delays in resolution, treatment of complex group insolvencies and greater clarity on procedural timelines."
He added that if adopted in their current form, the reforms could strengthen creditor confidence and improve outcomes, while maintaining the legal balance established through judicial rulings. Sources indicate the select committee's recommendations are likely to support the bill's main proposals.
The push for reform aligns with recent observations from another parliamentary body. On December 2, the Standing Committee on Finance, led by BJP MP Bhartruhari Mahtab, highlighted in a report that immediate steps were needed to boost IBC's efficiency. It cited systemic challenges like judicial shortages causing delays, uncertainty around resolution plans, and a lack of accountability among professionals managing bankrupt companies as factors hampering the law's full potential.
Queries sent to the select committee and the Ministry of Corporate Affairs regarding the report had not been answered at the time of reporting.
