IBC Amendments
Context:
The Parliament recently passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026.
While the original IBC enacted in 2016 successfully improved borrower discipline, it has faced mounting criticism over severe procedural delays, a massive backlog of cases, and low recovery rates for lending banks.
To address these structural challenges, a Select Committee submitted 11 key recommendations in December 2025, all of which have been incorporated into the new Act to ensure swifter admission of applications and strict adjudication timelines.
Key Amendments and Provisions:
The amendment fundamentally expands the scope of the code by introducing dedicated provisions for out-of-court mechanisms, group insolvency, and cross-border insolvency.
To support cross-border resolutions, the Act adds an explanation to Section 240C.
It broadens the term "corporate debtor" to explicitly include any entity incorporated with limited liability outside India.
Pre-Packaged Insolvency (PPIRP):
To expedite decision-making and reduce bottlenecks, the voting threshold required to approve a pre-packaged insolvency resolution process has been significantly lowered to 51%.
Regulating the Creditors:
The Insolvency and Bankruptcy Board of India (IBBI) is now legally empowered to establish strict timelines and enforce conduct standards specifically for the Committee of Creditors (CoC), enhancing overall creditor oversight.
Decriminalisation of Offences:
The amendment replaces stringent criminal penalties with civil penalties for infractions such as contravening a moratorium or the non-disclosure of a dispute by an operational creditor.
This shift acknowledges that delayed implementation of resolution plans is not always driven by malafide intent.
Resolution Over Recovery:
The Finance Minister reiterated during the parliamentary debate that the IBC is a framework meant for rescuing viable businesses and preserving enterprise value, rather than functioning merely as a debt recovery tool.
Performance Metrics:
As of December 2025, the IBC has facilitated the successful resolution of 1,376 companies.
This has enabled financial creditors to recover over ₹4.11 lakh crore, exceeding 34% of their total admitted claims.