Insolvency and Bankruptcy Code (Amendment) Bill, 2025:
The Lok Sabha has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introducing 12 key amendments to Insolvency and Bankruptcy Code, 2016 (IBC) aimed at maximizing stakeholder value, enforcing strict resolution timelines, and aligning Indian law with global best practices like cross-border insolvency.
Key Provisions of the IBC (Amendment) Bill, 2025:
- New Resolution Models: The Bill replaces the fast-track process with a creditor-initiated insolvency framework featuring an out-of-court settlement option and a “debtor-in-possession, creditor-in-control” model to maintain business continuity.
- Strict Timelines: It sets a timeline of 180 days for completion of liquidation, extendable up to 90 days. Admissions of insolvency applications must occur within 14 days once a default is established.
- The Adjudicating Authority must approve or reject resolution plans within 30 days, and National Company Law Appellate Tribunal (NCLAT) appeals must be decided within 3 months.
- Compressed Process: The new out-of-court initiation mechanism has a compressed 150-day timeline to expedite the recovery process.
- Cross-Border and Group Insolvency: The Bill provides an enabling framework for cross-border insolvency and group insolvency, crucial for promoting international investor confidence and handling complex corporate structures.
- Deterrents for Litigation: To curb delays caused by extensive litigation, penalties ranging from Rs 1 lakh to Rs 2 crore will be imposed on individuals initiating frivolous or vexatious proceedings.
- Protection of Workmen: Under the IBC hierarchy, workmen’s dues are given high priority, placed on par with secured creditors and ranked above unsecured financial creditors and government dues.
- Post-Resolution Success: Market capitalization of resolved firms reportedly grew from Rs 2.8 lakh crore to Rs 9 lakh crore within 5 years, demonstrating the long-term efficacy of the framework.
