Delays in the admission process continue to be a challenge in the insolvency cases in India, said Ravi Mital, chairperson of the Insolvency and Bankruptcy Board of India (IBBI) on Thursday. He stated that a new framework being planned is aimed at making resolution faster and more efficient without compromising the rights of stakeholders.
“The proposed amendments (to Insolvency and Bankruptcy Code) are designed in a way that we expect that the resolution process will be completed faster. The time taken in the admission of a resolution plan has been further reduced. Under the new amendments, a time has been prescribed now for the adjudicating authority to approve the resolution plan,” Mital said.
Introducing a Creditor-Led, Out-of-Court Mechanism
He further said that once a plan is filed, in a large majority of cases there is usually no dispute on the bid. So, the amendments proposed that the committee of creditors (CoC) can request the adjudicating authority to approve the bid amount and hand over that company to the resolution applicant. “This has been done in one or two cases earlier. Now, after the amendments, this (mechanism) will be tried again, and we believe that this will reduce the timeline for approval,” he said. Also, it will provide a certainty to the resolution applicant that they will get the company in a short period of time, and perhaps they will bid higher, Mital said.
Beyond Timelines: Cross-Border and Group Insolvency
Last week, the finance minister Nirmala Sitharaman introduced the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 in the Lok Sabha, by including provisions related to group insolvency, cross-border cases, and a creditor-led process to expedite resolution of bankrupt companies. The bill was later referred to the select committee.
The Bill seeks to mandate that insolvency applications are admitted within 14 days. Currently, an average of 434 days is being taken for admission of cases, leading to considerable value loss for the corporate debtors.
Experts said that one of the major incidences of delay in the corporate insolvency resolution process has been at the admission stage which has negatively impacted outcomes. “Limiting the adjudicating power of NCLT to admit or reject the application inter alia basis default will provide the necessary impetus for timely outcomes at the first stage itself. Segmenting approval of resolution plan into two parts of implementation and distribution is again a welcome move, as it prioritises speedy resolution of distressed entities over inter-creditor disputes,” said Siddharth Srivastava, Partner, Restructuring & Insolvency, Khaitan & Co.
Mital also said that the government is hopeful that the creditor-led scheme will compress the timeline which will give resolution applicants more confidence to bid for a stressed asset. The creditor-led resolution process is an out-of-court system which is initiated by the financial creditors, after the occurrence of default by the corporate debtor (CD), and with minimum interference of the adjudicating authority or the NCLT.
“Introduction of an out-of-courts mechanism in the form of creditor-initiated insolvency process with a reduced initiation approval threshold of 51% of creditors is a step forward in enhancing the rights of creditors to resolve debt quickly and boost credit cycle. This is also similar to the concept of pre-packs in the UK and US,” said Srivastava.
Mital said that under the latest amendments, the National Company Law Tribunal (NCLT) has been empowered to handle the challenges that are being faced by the stakeholders. “There’s a new section that empowers NCLT but we have to see if that will work or not,” he said.
Further, the amendments introduce a cross border insolvency mechanism that would be a major improvement from the present system that is limited to bilateral agreements, often resulting in delays and inefficiencies.