Brief Overview:
The much-awaited notification of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 by the Ministry of Corporate Affairs has finally kicked in with effect from 26th May 2026.
Technical Details:
 Key notified provisions include:
 1) 14-day timeline for CIRP admission enforced: Where debt and default are established, no other grounds to be considered by NCLT. Reasons for delay beyond 14-days must be recorded by NCLT.
2) Lookback period for avoidance and fraudulent or wrongful trading applications: Starting from two years preceding the initiation of CIRP and ending on admission date.
 3) Withdrawal of CIRP tightened: Once admitted, withdrawal of CIRP is not permitted before the CoC constitution and after invitation for resolution plans.
 4) Clarity on ‘security interest’ and triumph of contractual arrangements: Security interest would not include charge created by operation of a statue.
5) Minimum payout to dissenting financial creditors as per liquidation value under a resolution plan: Though notified, this would not apply in cases where a resolution plan has been approved by the CoC, or liquidation order has been passed by NCLT or the CoC has approved intimation to NCLT to initiate liquidation on or before the notified date.
6) Transfer of guarantor’s assets in the CIRP of a corporate debtor enabled: Creditors who have taken possession of a guarantor’s asset through enforcement, are now permitted to transfer such asset to the borrower’s CIRP, subject to CoC approval.
 7) Secured creditors during liquidation: Where the value of the security interest relinquished by the secured creditor is less than the total debt owed, the creditor shall remain secured to the extent of the value of such security interest and shall rank as an unsecured creditor for the balance debt.
 8)Two-stage approval on implementation and distribution of resolution plan: NCLT to approve resolution plans within 30 (thirty) days or record reasons for delay beyond 30 (thirty) days.
9) Benefit of interim moratorium no longer available to personal guarantors.
 10) One-time restart of CIRP before liquidation: Requires completion within 120-days. This shall also apply to CIRP of a corporate debtor initiated before the notified date, where NCLT has not passed a liquidation order.
 11)Liquidation: CoC shall supervise the conduct of the liquidation process. This shall apply to liquidation process initiated after the notified date and to an ongoing liquidation process where the liquidator has not made an application for dissolution.
12)Monetary penalties for frivolous or vexatious proceedings or contravention of the resolution plan or moratorium activated.
Takeaways:
With most amendments notified and ripe to be tested in practice, it would be prudent to pause and re-assess CIRP (whether admitted, ongoing or on the brink) to re-align strategy and ensure compliance with the amended framework to reduce risk and improve outcomes! In the meantime, we await notification of the provisions as regards group insolvency, creditor-led CIRP, and cross-border insolvency.
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