Author – Varun Kumar
Co – Author – Nikita Sharma
Abstract
The Insolvency and Bankruptcy Code 2016 is intended to provide a mechanism for the timely
resolution of corporate insolvency in India, improving the value of the assets available to
creditors and establishing a discipline for repayment. The amendments made to the Code thus far
have aimed to mitigate procedural and structural issues that have developed over time, and this
amendment is another attempt to address these issues as well as add further efficiency to the
process, address concerns over group insolvencies, and eliminate lengthy procedural delays.
Although the 2025 Amendment Bill has introduced some changes that have been requested for a
long time, many of the fundamental problems associated with the current insolvency framework
still need to be resolved through further legislation and judicial actions. In this article, we will
examine the major changes that were introduced in the 2025 Amendment Bill and provide an
analysis of the existing gaps that require legislative and judicial repair.
I. Introduction
The Insolvency and Bankruptcy Code (IBC) has transformed how India deals with insolvency
since its introduction, moving control over bankrupt companies from the companies themselves
to their creditors, while providing a time-based outline for resolving these companies. Although
it offers tools to improve efficiency within these frameworks, judicial decisions and practice
have demonstrated that simply creating new laws does not guarantee success through improved
efficiency. There have been many instances of slow resolutions of bankruptcies; competing
jurisdictions around bankruptcies; and complicated procedures have tested the IBCs pledge to
provide certain and quick resolutions to debt problems in India.
Additionally, the passage of the IBC and the resulting changes in corporate insolvency resolution
have resulted in a drastic shift from creditor/ borrower relationships towards lender/ creditor
relationships in many ways. There has been much confusion over jurisdiction and the ability of
the Code to guarantee speed and certainty. Thus, many of the barriers that caused this confusion
should be addressed if there is to be any long-term success under the Code.
The IBC Amendment Bill of 2025 attempts to resolve some of these issues by making changes to
the existing rules. The Bill recognises that there have been several difficulties in the application
of the Code in the area of corporate insolvency resolution (CIRP), but that it is only addressing
certain aspects instead of making extensive and far-reaching changes. The Bill does provide for
an increase in certain areas, however it does not address the large number of systemic
inefficiencies that are still causing problems in India in relation to the bankruptcy/ insolvency
system.
II. Primary Changes Found in the 2025
A. Group Insolvency Framework.
One of the key aspects of the Bill is its embrace of group insolvencies, and enabling related
entities that form a corporate group to jointly proceed through a single entity-wise insolvency
proceeding. Corporate groups frequently structure themselves into highly complex networks of
entities that share economic ties, which make it inefficient and costly to conduct separate entity-
wise insolvency proceedings on each entity. Thus, the Bill creates mechanisms that allow for
jointly conducted insolvency proceedings for related entities while still subject to judicial
oversight. The inclusion of the group insolvency framework is an alignment of Indian insolvency
legislation to global trends of recognising economic realities over formally segregated corporate
structures. However, the Bill does not provide for an exhaustive, comprehensive statutory
framework, but provides almost complete discretion to the adjudicating authorities.
B. Streamlining Procedures and Improving Delays
In addition to providing a mechanism for group insolvency, the Bill introduces amendments
aimed at streamlining and improving procedural delays associated with certain aspects of the
CIRP. These include:
- Providing for clearer timelines for different stages of the CIRP; and
- Placing limitations on the ability to file repetitive appeals.
These provisions represent an acknowledgement by lawmakers of the negative impact that
excessive judicial intervention and repetitive appeals have had on the time-bound nature of the
IBC.
The addition of some clarification and process-based limitations may reduce unnecessary delays;
however, these additions do not address the more systemic issues of capacity constraints that
NCLTs currently experience and which create an excessive burden on these Tribunals.
C. Enhancing the Approval Process for Resolution Plans
The Bill will clarify the Bill’s approach to resolving issues in the approval process for resolution
plans; specifically, as it relates to compliance requirements and creditor vote decision-making.
By clarifying statutes, the Legislature is working to eliminate ambiguity and inconsistencies that
have resulted in different judicial decisions.
The new clarifications will thus be largely a codification of the decisions of the Judiciary. These
clarifications will not introduce any significant change or new principle into the statutory
framework governing the approval process of a resolution plan.
III. The unresolved issues in the bill are as follows:
A. The bill does not address the continued delay in the Corporate Insolvency Resolution
Process (CIRP).
Even after several amendments to the statute to expedite process timelines, companies have often
exceeded the statutory time limits with no enforcement mechanism for violating such limits or
holding institutions responsible for any delay in the process. This results in the continued
reliance on legislative time limits as a goal rather than a reality due to the lack of consideration
of the infrastructure and human resources of the adjudicating bodies.
B. Operational Creditors still have limited protections.
The operational creditors continue to be in a weak position in the context of the process under
the IBC and are not afforded meaningful protection to ensure that they are treated fairly in a
resolution plan. The ongoing reliance of the judiciary on the commercial wisdom of the
Committee of Creditors (CoC), combined with the very limited scope for judicial review on
substantive grounds, does not provide the operational creditor with any level of real certainty.
C. No framework is available for cross-border insolvency.
While the bill has included provisions for the treatment of Group Insolvency, it has failed to
address the issue of cross-border insolvency. The lack of a clear statutory framework for cross-
border insolvency proceedings, consistent with the UNCITRAL Model Law, continues to limit
India’s ability to manage effectively the increasing number of multinational corporations
experiencing financial distress across national borders.
D. The bill gives a disproportionate amount of discretion to the judiciary.
Much like the previous versions of the IBC, this bill follows the same trend of providing very
little detailed statutory guidance to adjudicating authorities about how to exercise the significant
discretionary authority delegated to them and results in the potential for significant and
inconsistent results, which is contrary to one of the fundamental tenets of the insolvency regime,
i.e., promoting a framework for predictability in outcomes.
IV. Why There is a Need for a Comprehensive Reevaluation of the Structure
The 2025 Amendment Bill reflects the legislative approach of being cautious, preferring to create
incremental changes rather than creating a completely new structural system. Such a cautious
approach allows consistency and stability; however, it also prevents potentially important
discussions about institutional capability or capacity, hierarchy of creditors’ rights, and the need
for judicial restraint.
In order for any insolvency framework to provide adequate, effective, value-driven resolution of
insolvency, there must be a focus on both the proposed changes within the legislation while
simultaneously investing in both the tribunals, drafting clear legislation that is not subject to
differing interpretations, and establishing a standardizing effect on judicial decisions that could
modify the rights of creditors.
V. Summary
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, is a further change in an ever-
evolving system of insolvency within India. The 2025 Amendment Bill has provided some
positive changes regarding establishing the principles of group insolvency, refining the
procedures within CIRP, and clarifying some of the matters related to the tribunal system. The
Bill is another example of an incremental change in a system needing systemic reform because it
fails to address the underlying systemic issues and institutional impediments.
To achieve its goal of providing timely and value-maximising insolvency resolutions, any future
legislative effort must not continue to focus on procedural issues but rather address the broader
digitalisation (underlying systemic impediments) to facilitate the successful
Varun Kumar
Author
3rd Year B.Sc. LL.B. (Hons.), JECRC University, Jaipur
Nikita Sharma
Co-Author
3rd Year B.A. LL.B. (Hons.) JECRC University, Jaipur
