Lok Sabha Passes IBC Amendment Bill with All Recommendations Accepted

Indian Bankruptcy Code (IBC) Amendment Bill: Key Reforms and Updates

Introduction The central government has accepted all recommendations of the Parliament's Select Committee on the IBC Amendment Bill, incorporating experiences gained since 2016 into the new bankruptcy code. Finance Minister Nirmala Sitharaman stated that the new code seeks to address "practical challenges" faced since 2016.

Key Reforms The IBC Amendment Bill introduces several key reforms, including:

• Group Insolvency Framework: Efficiently resolves insolvencies involving complex corporate group structures, minimizing value destruction and maximizing value for creditors.
• Cross-Border Insolvency Framework: Lays the foundation for protecting stakeholder interests in domestic and foreign proceedings, promoting investor confidence, and aligning domestic practices with international best practices.
• Creditor-Initiated Insolvency Resolution Process (CIIRP): An out-of-court initiation mechanism for genuine business failures, facilitating faster and more cost-effective insolvency resolution with minimal business disruption.
• Section 7 Amendments: Ensures insolvency applications are admitted by the National Company Law Tribunal (NCLT) within 14 days, reducing the average admission period from over 434 days.

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Impact and Statistics

• Since 2016, the IBC has contributed significantly to keeping companies alive that can undergo resolution, with banks recovering Rs 1.49 lakh crore from non-performing assets (NPAs).
• The IBC has facilitated resolutions of 1,376 companies, enabling creditors to recover Rs 4.11 lakh crore as of December 2025.
• Financial creditors have seen a recovery of over 34% of their claims.
• The IBC has provided relief to 1.62 lakh homebuyers through the resolution of 111 real estate cases.

Clean Slate Principle and Pending Proceedings

• The new Bill ensures no new claim is brought up post the successful resolution of the company.
• The government will not withdraw any license that allows the business to function once the resolution process is concluded.
• Pending proceedings on erstwhile promoters will continue as they are not part of the clean slate principle.

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IBC as a Framework for Rescuing Viable Businesses

• The IBC is not a debt recovery tool, but a framework for rescuing viable businesses and solving financial stress while preserving enterprise value.
• 94.95% of the fair value of assets admitted in the IBC process are recovered.