India's landmark Insolvency and Bankruptcy Code (IBC) is poised for its most significant transformation since its inception nine years ago. The upcoming winter session of Parliament will consider comprehensive amendments that promise to revolutionize the country's debt resolution landscape.
Parliamentary Committee Finalizes Reform Proposals
A select committee of the Lok Sabha held crucial consultations with government ministries on Thursday to finalize its report on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025. The committee, led by Bharatiya Janata Party MP Baijayant Panda, engaged with representatives from the Union ministries of corporate affairs, and housing and urban affairs during the meeting.
According to three anonymous sources familiar with the development, the revised bill is expected to be presented in Lok Sabha during the second or third week of December. This timeline depends on the government securing cabinet approval for the legislation. The winter session of Parliament is scheduled to run from December 1 to December 19.
Key Features of the Proposed Amendments
The comprehensive reform bill introduces several groundbreaking changes to the insolvency framework. The most significant proposals include establishing a cross-border insolvency regime that will address international dimensions of corporate failures.
Other major changes involve allowing partial asset sales of bankrupt businesses, enabling predominantly out-of-court debt resolution for well-regulated financial creditors, and facilitating early debt settlement options for distressed companies with their lenders.
The legislation also aims to streamline the approval process by permitting tribunals to initially approve a company's debt resolution plan and subsequently address creditor disagreements on distribution of proceeds. This approach is designed to prevent unnecessary delays in corporate turnaround efforts.
Addressing Longstanding Challenges
The reforms are expected to significantly speed up and streamline India's debt resolution ecosystem. The changes will enable struggling companies to recover more quickly while allowing creditors to salvage their investments more effectively, ultimately enhancing the economy's overall productivity.
Thursday's meeting involved a detailed clause-by-clause analysis of the bill, ensuring thorough examination of all proposed changes. The amendments pay particular attention to issues identified by courts and practitioners, including complexities in group and cross-border insolvency cases.
According to Atul Tandon, Director of NPV Insolvency Professionals Pvt. Ltd., "The amendment proposals in the bill pay particular attention to issues flagged by courts and practitioners" and address concerns about misuse of withdrawal and moratorium provisions by promoters.
Current IBC Performance and Pending Challenges
Official data from the Insolvency and Bankruptcy Board of India (IBBI) reveals that out of more than 8,600 companies admitted for bankruptcy resolution in tribunals, approximately 1,300 have been successfully rescued. Proceedings are ongoing in 1,898 cases, with more than three-fourths of these pending for over 270 days.
Creditors have realized nearly ₹4 trillion from resolved cases, representing about one-third of their admitted claims. While these numbers demonstrate progress, the delays in resolution remain a significant concern that the new amendments aim to address.
Jyoti Prakash Gadia, Managing Director at Resurgent India, noted that while the proposed amendments address several key issues, "The issues regarding the time-bound redressal of the resolution process are still open, as the delays are still visible." He emphasized the need to strengthen tribunals to ensure timely case handling with strict compliance from all parties.
The reforms represent a crucial step in evolving India's insolvency framework, though experts suggest that continuous monitoring and further improvements will be necessary to achieve optimal efficiency in the debt resolution process.
