1. Introduction
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (“Amendment Act”) received Presidential assent on April 6, 2026, marking the most significant reform to India’s insolvency framework since the original enactment of Insolvency and Bankruptcy Code’s (“IBC”) in 2016 (and has yet to become law). Over the last decade, the IBC has transformed India’s insolvency landscape by improving creditor recoveries, shifting control from defaulting promoters to creditors and creating a modern regulatory framework where none existed before. Yet its journey has also laid bare persistent structural gaps: uneven capacity at National Company Law Tribunal (“NCLT”), delays that erode value, inconsistent jurisprudence on limitation and financial debt and a resolution ecosystem still struggling to deliver speed with certainty. IBC’s promise of revival over recovery remains intact, but its effectiveness now hinges on closing these systemic cracks. Resolution timelines routinely breached the statutory 330-day limit, admission proceedings were frequently contested, and the absence of a pre-insolvency resolution mechanism meant that distressed assets often entered formal proceedings at a stage where going concern value had already been substantially reduced. The Amendment Act introduces a creditor-driven resolution track, codifies judicially-evolved principles, tightens timelines across stages and lays the foundation for group and cross-border insolvency.
This newsletter distils key amendments that impact Indian insolvency regime.
2. Key Amendments
The Amendment Act recalibrates IBC by compressing timelines and preserving creditor control beyond Corporate Insolvency Resolution Process (“CIRP”). The following amendments are, therefore, best understood as targeted reforms, aimed at making resolution and liquidation faster, more predictable and commercially effective.
2.1 Admission, withdrawal and restoration: The Amendment Act introduces structural changes to the initiation, conduct and continuity of resolution process. NCLT is now mandated to admit or reject a CIRP application within 14 days of receipt under section 7, with any delay required to be accompanied by recorded reasons.[1] Mandatory admission is triggered where (a) a default has occurred; (b) the application is complete; and (c) no disciplinary proceeding is pending against the proposed resolution professional, thereby curtailing NCLT’s discretion to consider extraneous factors at the admission stage.[2] Once admitted, the scope for withdrawal under section 12A has been significantly narrowed;[3] an application may now only be withdrawn after constitution of the Committee of Creditors (“CoC”) and before issue of the invitation for submission of a resolution plan, while approval by more than 90% of the CoC has been retained. If NCLT does not receive any resolution plan or if plan(s) are rejected by CoC or itself, then it can restore the CIRP provided 66% of CoC has voted in favour.[4] In such situation parties have a second chance 120 days to complete CIRP failing which, NCLT will pass a liquidation order. This will apply to ongoing CIRPs where a liquidation order has not yet been passed.
2.2 Resolution plan: The Amendment Act seeks to accelerate resolution by introducing sharper timelines and procedural innovations. NCLT may now adopt a two‑stage approval mechanism: first approving the resolution plan itself, and within 30 days thereafter, deciding on the manner of asset distribution. This ensures that distribution disputes no longer stall plan implementation. Complementing this, a 30‑day statutory timeline requires NCLT to approve or reject a resolution plan within 30 days of the resolution professional’s application, with any delay mandatorily supported by recorded reasons. On the regulatory front, Competition Commission of India (“CCI”) clearance (if required) may now be obtained after CoC approval, provided it is secured before NCLT’s final sanction thereby streamlining the sequencing of regulatory and judicial processes.
The Act also codifies the extinguishment of residual claims. Once a resolution plan is approved, every claim against the corporate debtor or against its assets that are not expressly provided for in the plan stands irrevocably extinguished, and no further or parallel proceedings in any forum are maintainable in respect of such claims. This legislatively settles the “clean slate” principle by ensuring the successful resolution applicant takes over the corporate debtor free from undisclosed or unresolved liabilities, thereby preserving plan viability and finality. Significantly, the amendment applies retrospectively; the newly inserted sections 31(5) and 31(6) [5] are deemed to operate for all resolution plans approved on or after May 28, 2016, which is when IBC commenced, subject only to a carve‑out for matters that have already attained finality (e.g., where rights have crystallized through a final, non‑appealable judgment or concluded enforcement).
In practical terms, creditors and claimants who did not lodge, admit, or secure treatment of their claims within the CIRP cannot revive them after approval, and executing courts, tribunals, and regulators are bound to give effect to the extinguishment and the plan’s waterfall distribution. This framework aligns statutory text with prior judicial recognition of resolution plan sanctity, reduces post‑approval litigation drag, and enhances certainty for resolution applicants, lenders, and markets.
2.3 Liquidation: The Amendment Act brings about a change in liquidation process with reduction of timelines and revamping of processes.
NCLT is now required to pass a liquidation order within 30 days of receipt of an application for initiation of liquidation, bringing the same timeline discipline to liquidation commencement as for CIRP admission stage. Once liquidation is ordered, the NCLT must refer the matter to Insolvency and Bankruptcy Board of India (“IBBI”) for recommendation of a liquidator. This must not be the same as the one who administered the CIRP for a corporate debtor eliminating the conflict of interest that previously existed where a single professional could oversee both processes. While the IBBI initiates the appointment, the CoC retains real control as it may replace the liquidator at any time with a 66% vote.
The liquidation timeline has also been compressed, completion is now mandated within 180 days of commencement, with a single extension of up to 90 days from NCLT, representing a significant reduction from the earlier one-year timeline.[6] Finally, the Amendment Act imposes strict discipline on enforcement of security interests. Any secured creditor intending to realise its security interest must notify the liquidator within 14 days of liquidation commencement date; failure to do so results in a deemed relinquishment of the security to the liquidation estate.[7]
2.4 Creditor-Initiated Insolvency Resolution Process (“CIIRP”): The centrepiece of the Amendment Act is the insertion of Chapter IV-A (sections 58A–58K) creating India’s first out-of-court, debtor-in-possession resolution mechanism in the form of CIIRP. Access is deliberately narrow. Only eligible initiators, being specified financial creditors notified by the Central Government holding at least 51% of the financial debt by value may invoke CIIRP, excluding operational creditors and dispersed smaller lenders. Before filing creditors must serve a 30-day advance notice on the corporate debtor and invite representations, embedding a structured pre-initiation engagement that contrasts with the more adversarial in court CIRP.
In a significant departure from conventional insolvency proceedings, CIIRP adopts a debtor-in-possession model where existing management retains control of the corporate debtor under the supervision of the resolution professional aligning incentives to preserve going‑concern value while imposing compliance discipline. Unlike CIRP, the moratorium is not automatic but resolution professional must apply to NCLT for a moratorium order. allowing targeted relief calibrated to the case rather than a blanket stay from day one.
Timelines are tight. CIIRP must conclude within 150 days, with a single extension of up to 45 days available on a CoC application supported by 66% votes. This will promote speed and price certainty for resolution applicants. Outcome pathways are clearly defined; if no resolution plan is received or approved within time, if the plan is rejected or if the corporate debtor’s personnel do not cooperate with the resolution professional NCLT must convert CIIRP into a full CIRP. Independently, the CoC may seek conversion at any stage by applying to the NCLT, providing a safety valve where out‑of‑court progress stalls.
2.5 Group Insolvency: New section 59A (Chapter V-A) empowers the Central Government to craft comprehensive group insolvency regime rules[8] for corporate debtors within the same group. The rules may provide for
- a common NCLT bench to adjudicate related proceedings, ensuring judicial consistency across interconnected insolvencies
- mechanisms for coordination between the respective CoCs and insolvency professionals
- appointment of a common resolution professional or constitution of a joint CoC, consolidating oversight where group-level resolution is pursued
- binding coordination agreements for different aspects of the proceedings which will provide a contractual framework to align the conduct of parallel insolvency processes across group entities.
Taken together, section 59A lays the foundation for modern, internationally aligned group insolvency promoting coordinated administration and plan coherence while respecting corporate separateness and creditor priorities.
2.6 Cross-border Insolvency: Section 240C empowers Central Government to make rules pursuant to cross-border insolvency. The rules may include process for recognition of proceedings, granting relief, judicial cooperation etc. Under the IBC, the Central Government is empowered to enter into bilateral agreements with foreign states for cross‑border recognition and enforcement of insolvency proceedings. To date, however, no such bilateral agreement has been executed.
3. Impact of the Amendments
The Amendment Act signals a decisive shift towards speed, certainty and creditor-led resolution. CIRP initiation is now more streamlined. Once the prescribed conditions under section 7 are met, NCLT must admit the application, reducing the scope for procedural resistance that historically delayed matters. Withdrawal is confined to a defined stage, limiting uncertainty and improving planning. A one-time restoration window for CIRP available for ongoing cases prioritizes value maximisation by reviving stalled processes and getting viable resolutions back on track.
Structural reforms to plan approval materially strengthen execution. The 30-day approval mandate and phased approval mechanism compress the gap between CoC approval and plan implementation, a stage previously prone to attrition in asset value and investor confidence. Deferring CCI clearance until after plan selection shields applicants from premature filing costs. Retrospective extinguishment of residual claims under section 31(6) addresses a longstanding commercial concern, providing acquirers of stressed assets with clean-slate certainty and insulating them from inherited litigation risk. Claims not forming part of the approved plan stand extinguished, and no proceedings will continue or be initiated in respect of such claims. Acquirers therefore take over the corporate debtor without residual liabilities resurfacing post-acquisition.
Further, liquidation reforms similarly strengthen value preservation after CIRP failure. CoC supervision of the liquidator extends creditor oversight into the liquidation phase, ensuring that it remain commercially accountable rather than being left entirely to liquidator’s discretion. This should make liquidation a faster, value-maximising process, rather than a prolonged proceeding.
Additionally, introduction of CIIRP signals an intent to enable resolution before formal insolvency proceedings are triggered which should preserve going concern value at a stage where it is most recoverable. By placing lenders in direct control of the restructuring process outside NCLT framework, reflects a market-driven philosophy more aligned with international best practices. Access is however restricted to notified financial creditors who are yet to be specified, leaving operational creditors and smaller lenders outside its ambit, which may constrain application in practice. While it may be an enabling framework, its effectiveness will ultimately depend on the clarity and completeness of the rules along with subsequent implementation. The cross-border framework is also an enabling reform, though its working will inextricably be linked with recognition of foreign government proceedings and reciprocal arrangements. If implemented well, it should improve predictability for multinational corporates and cross-border investors. However, implementation is unlikely to be seamless.
4. Conclusion
The Amendment Act marks a clear reset in India’s insolvency framework. By hard‑coding timelines, introducing phased approvals, and extending creditor control into liquidation, it directly tackles the three deficits that have long undermined confidence; delay, unpredictability, and weak creditor agency. For the first time, IBC offers a genuinely enforceable pathway from admission to liquidation, anchored in creditor‑led resolution. Whether these reforms deliver on their promise will turn on judicial discipline in applying the new mandates and the robustness of subordinate rules governing CIIRP. The architecture is now stronger than at any point since 2016; the challenge, as ever, lies in disciplined execution.
Author
Nilay Mishra
[1] Section 7 enables a financial creditor, either by itself or jointly with other financial creditors, to initiate CIRP against a corporate debtor upon occurrence of default. Section 3(12) defines default as non-payment of unpaid debt when it has become payable either in whole or part.
[2] In Vidarbha Industries Power Ltd. vs Axis Bank Ltd., (2022) 8 SCC 352, the Supreme Court held the term “may” in section 7 conferred discretionary power on NCLT to consider factors beyond existence of default. This amendment substitutes “may” with “shall,” converting admission into a mandatory obligation where conditions are met, overriding this position.
[3] Section 12A permits an applicant to withdraw an admitted CIRP application subject to approval of at least 90% of the CoC votes.
[4] Section 33(1A) enables NCLT to restore CIRP once, before passing a liquidation order, for a period not exceeding 120 days on an application approved by the CoC with at least 66% voting share.
[5] Section 31(5) permits approval from the CCI to be obtained after CoC approval of a resolution plan, provided such approval is secured before NCLT approves the plan. Section 31(6) extinguishes all claims against the corporate debtor or its assets that are not covered by the approved resolution plan, and bars continuation or institution of proceedings in respect of such claims. This codifies the Supreme Court’s judgment in Ghanashyam Mishra and Sons Pvt. Ltd. vs Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657, where it was held that once a resolution plan is approved under section 31, all claims not forming part of the plan, including statutory dues, stand extinguished and cannot be pursued against the corporate debtor.
[6] Regulation 44(1) of IBBI (Liquidation Process) Regulations, 2016 provided for a one-year timeline to complete liquidation. This has now been reduced.
[7] Section 3(30) defines a secured creditor as a creditor in whose favour a security interest has been created. Section 3(31) defines security interest as any right, title, interest, claim or lien created in favour of, or provided for, a secured creditor by a transaction securing payment or performance of an obligation.
[8] The rules are yet to be notified.