Brief Overview:
Speeding up insolvency proceedings, strengthening creditor rights, tightening liquidation oversight, and bringing greater clarity to legacy claims and statutory dues, the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (the “Amendment Act”) ushers significant reforms to the Insolvency and Bankruptcy Code, 2016 (the “IBC”).
The Amendment Act also lays the groundwork for group insolvency, creditor-initiated resolution, cross-border insolvency, and a centralised electronic insolvency platform.
Technical Details:
Key highlights of the Amendment Act:
1) Time‑bound insolvency proceedings re‑emphasised: Applications under Sections 7, 9 and 10 must be admitted or rejected within 14 days, with reasons to be recorded for any delay. Once default is established and the application is complete, rejection on extraneous grounds is not permitted.
2) Amendment to Section 12A (withdrawal of CIRP): Withdrawal is not permitted before CoC constitution or after issuance of the first invitation for resolution plans. Withdrawal applications must be decided within 30 days, with reasons for delay.
3) Expanded role of the CoC: The CoC is empowered with a supervisory role during liquidation and may replace the liquidator.
4) Protection for dissenting financial creditors: Dissenting financial creditors shall receive at least the minimum amount payable in liquidation.
5) Restoration of CIRP: The adjudicating authority may permit restoration of CIRP for up to 120 days, upon application by at least 66% of the CoC, even where liquidation is otherwise warranted.
6) Avoidance proceedings: Avoidance actions, including fraudulent transactions and wrongful trading, shall continue independently of CIRP or liquidation timelines.
7) Extinguishment of prior claims: Upon approval of a resolution plan, all prior claims against the corporate debtor stand extinguished and no fresh proceedings may be initiated; however, liabilities of promoters and guarantors remain unaffected.
8) Clarifications and new definitions: ‘Security interest’ must arise from an agreement and not merely by operation of law. New definitions of ‘registered valuer’ and ‘service provider’ have been introduced, and existing definitions relating to avoidance transactions and fraudulent or wrongful trading have been clarified.
9) Duties of the IRP: The Interim Resolution Professional is expressly empowered to verify and determine the value of claims.
10) Transfer of guarantor assets: Creditors may transfer assets of personal or corporate guarantors during CIRP, subject to CoC approval.
11) Group insolvency: A separate chapter on group insolvency has been introduced, empowering the Central Government to prescribe the framework for group proceedings.
12) Creditor initiated insolvency resolution process: A new Chapter IVA provides for eligibility, initiation, approvals, objections, timelines, and the role of the resolution professional.
13) Cross border insolvency and online platform: The Central Government may prescribe a framework for cross border insolvency and establish a centralised online insolvency platform.
14) Substitution of penal provisions: Contraventions relating to moratorium, approved resolution plans, and disclosure obligations now attract monetary penalties, reflecting a shift from criminal to civil penalties.
JC takeaway:
The Amendment Act seeks to speed up insolvency resolution, limit threshold-stage litigation, and strengthen creditor control across both resolution and liquidation, which should improve efficiency and reduce delay-driven value erosion.
Commercially, it is expected to improve deal certainty through stronger backing for resolution plans, extinguishment of legacy claims, and better protection for dissenting creditors, while expanded avoidance remedies, closer liquidation oversight, and clearer rules on security interests may help enhance recoveries and reduce value leakage.
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