The Lok Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 on Monday, incorporating reforms aimed at improving resolution timelines, enhancing transparency, and balancing the interests of debtors, creditors, and employees.
Finance Minister Nirmala Sitharaman informed Parliament that apart from the several amendments since 2016, “jurisprudence laid out by the tribunal and the courts has been taken on board so that we can maximise the value for stakeholders and improve the process itself.” While addressing the Lok Sabha on Monday, the Minister defended the IBC’s track record while acknowledging the concerns raised by the Opposition.
The Bill accepts all 11 recommendations of the Select Committee headed by Baijayant Panda and adds a 12th: Requiring creditors to record reasons for selecting winners, a move aimed at enhancing transparency in the resolution processes.
CIIRP can be triggered by financial creditors holding at least 51 percent of the debt. Crucially, the debtor is not left out of the equation. The creditor initiating CIIRP must notify the debtor and allow a minimum 30-day window for representation. The debtor may also file objections before the National Company Law Tribunal (NCLT).
Noting a shift in the existing framework, the Finance Minister described that the Bill was moving from a purely “creditor in control” model to a “debtor in possession and creditor in control model.” “So, the management continues to be vested in the existing board of directors or partners but with safeguards and defined timelines.,” she said.
The process carries a 150-day timeline, extendable by up to 45 days. If a resolution plan is not received, is rejected, or the debtor fails to cooperate, the NCLT may convert CIIRP to a full CIRP.
“CIIRP will address all known inefficiencies by providing a quicker, creditor-initiated, and less “adversarial” mechanism to resolve legitimate business struggles than before,” says Varun Singh, founder & managing partner, Foresight Law Offices India.
He adds that the CIIRP aims to address the problem of unsatisfactory alternatives to insolvency proceedings, where the options were either a long, uncertain process under the NCLT with no opportunity for recovery after three years, or a very weak out-of-court reorganisation process.
Records from financial institutions now serve as sufficient proof, and the NCLT must provide written justifications if it fails to pass an order within 14 days. Furthermore, the tribunal is required to approve or reject a resolution plan within 30 days of receipt.
Similarly, the Bill creates an enabling framework for cross-border insolvency, addressing situations where a debtor holds assets or has creditors across multiple jurisdictions. Cross-border insolvency refers to a debtor having assets or creditors in multiple countries.
Liquidation proceedings must now be completed within 180 days, extendable by 90 days, while voluntary liquidation must conclude within one year.
As of December 2025, the Code has facilitated the resolution of 1,376 companies, enabling creditors to recover Rs4.11 lakh crore. Moreover, the ratio of companies resolved versus those entering liquidation has improved dramatically, from 1:5 in 2017-18 to near 1:1 in 2024-25, reflecting a maturing ecosystem increasingly oriented towards rescue rather than wind-down.
Sitharaman also noted that 78 percent of the CIRPs ending in liquidation involved companies that were either with BIFR or already defunct, meaning the economic value in most of these firms had nearly completely eroded before they even entered the process.
First Published: Mar 30, 2026, 19:17
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