The proposed amendments to India's Insolvency and Bankruptcy Code (IBC) are poised to be a transformative "game-changer," according to the head of the parliamentary committee that reviewed the legislation. Baijayant Panda, Chairperson of the Lok Sabha select committee on the IBC (Amendments) Bill 2025, stated that the reforms aim to slash corporate rehabilitation time by half and significantly enhance recovery rates for creditors.
Expediting Resolution and Enhancing Recoveries
Panda emphasized that the primary goal of the 68 amendments is to enforce stricter compliance with the IBC's timelines. Currently, debt resolution processes often extend beyond two years, despite a stipulated cap of 330 days. A key change involves replacing the permissive word "may" with the mandatory "shall" in legal provisions concerning case admissions, making adherence to deadlines obligatory.
He projected dramatic improvements, expecting the time taken for resolutions to be cut by 50%. Furthermore, annual recoveries, which have been in the range of ₹50,000-60,000 crores in recent years, are anticipated to rise substantially. The amendments also streamline the process by requiring only the winning bidder, not all bidders, to seek approval from the Competition Commission of India (CCI), saving crucial time.
Real Estate Distress: A Job for RERA, Not IBC
A significant point of discussion has been the handling of insolvency in the real estate sector. The parliamentary committee firmly believes that project-specific insolvency resolution contradicts the core principle of the IBC. Panda argued that the IBC's fundamental tenet is the displacement of defaulting management and their disqualification from bidding, unless they clear their dues.
This stance gains importance as the Supreme Court, in a September judgment (Mansi Brar Fernandes vs Shubha Sharma & ANR), had suggested the government consider project-wise resolution for real estate. However, as the Court's decision came after the Bill was tabled, it is not part of the current amendments. The Ministry of Corporate Affairs and the Insolvency and Bankruptcy Board of India (IBBI) are separately examining the suggestion.
Panda clarified that financial issues in specific real estate projects should be addressed by the Real Estate Regulatory Authorities (RERA). RERA should ensure promoters complete projects or provide refunds. If they fail, then the entire company—not just a project—should enter the IBC process, leading to a change in promoter and management. "Insolvency is about the company, not about a project," Panda stated, highlighting the problem of wilful default on specific projects while others thrive.
Tailored Relief for Small Businesses and New Provisions
The amendments introduce specific relief for micro and small enterprises (MSMEs). The committee recommended a lower voting threshold for these entities to access a pre-packaged insolvency resolution framework. MSMEs can now enter this scheme with approval from 51% of the committee of creditors (CoC), compared to the 66% required in the regular process. Under this model, the existing owner retains control of operations while the CoC oversees the resolution, a structure better suited for smaller businesses with limited resources.
Additionally, the Bill introduces provisions for group insolvency and cross-border insolvency, filling major gaps in the existing legal framework. Separately, the government is also proposing to increase the number of National Company Law Tribunal (NCLT) benches to handle the caseload more efficiently.
The Path Forward and Industry Perspective
The select committee's report was tabled in the Lok Sabha last week. The Ministry of Corporate Affairs is expected to move a revised Bill for passage in the upcoming budget session of Parliament. Panda hailed the IBC's impact so far, noting the recovery of "lakhs of crores," the saving of tens of thousands of jobs, and a dramatic reduction in banks' non-performing assets (NPAs). "But it is time for a reboot," he asserted.
Legal experts acknowledge the complexity of project-wise resolution. Anoop Rawat, a partner specializing in insolvency at Shardul Amarchand Mangaldas & Co., noted that while courts decide on a case-by-case basis, it is not the norm. He pointed out that aspects like land leases often transcend individual projects, making a one-size-fits-all legal formula challenging and suggesting that a flexible, judicial approach might be preferable.
The overarching message from the panel chief is clear: the IBC (Amendments) Bill 2025 is designed to inject new speed and efficiency into India's corporate insolvency landscape, promising faster resolutions and better outcomes for all stakeholders involved.
