A decade after India adopted an insolvency resolution regime modelled on best global practices, a welcome and timely attempt is being made to reinforce it. The Insolvency and Bankruptcy Code (Amendment) Act, 2026, as well as the numerous discussion papers and rules unveiled by the Insolvency and Bankruptcy Board of India (IBBI) in recent months reflect the wisdom gathered from the learnings of the past few years.
The Insolvency and Bankruptcy Code (IBC), 2016, was, no doubt, a vast improvement on the inept, archaic regime it replaced. Quite a few large legacy corporate bankruptcy cases resolved in the initial years of the IBC were a watershed, but the resolution pace and the extent of creditor claim realisation have not been truly satisfactory since. Of 8,833 cases admitted under the IBC till end-2025, resolution plans were approved for only 1,376, and 2,952 cases went for liquidation with value realisation as good as nothing in many. As for the large cases, realisation by creditors was nearly a third of the admitted claims of Rs 11.1 lakh crore.
There have also been issues like capacity constraints in the adjudicatory architecture. Besides, a few Supreme Court rulings willy-nilly interfered with the IBC, most notably the May 2025 liquidation order for Bhushan Power and Steel six years after its resolution plan was approved under the IBC, citing non-adherence to timelines. Thankfully, the apex court withdrew the order two months later, helping restore confidence in the insolvency regime. The IBC, being a “special statute”, is designed to have an overriding effect over other laws inconsistent with it, but conflicts arose as similarly equipped laws like the Prevention of Money-Laundering Act worked at cross purposes with it.
Bhushan Power Lesson
So, there is a need to balance the integrity of the whole system with essential elements of pragmatism, which the recent amendments seek to achieve. The introduction of the creditor-initiated insolvency resolution process (CIRP), for instance, is meant to minimise disruptions to business and use of court time, besides making outcomes more predictable. The mechanism allows creditors (51% in value) to initiate out-of-court insolvency in the event of apparently genuine business failures, with a tight timeline to close the window and report to court.
Under the CIRP, the lender gets a chance to resolve the emerging stress while the existing management still runs the business. On the face of it, this facility may appear to be at variance with the basic IBC principle to keep promoters out of the resolution process. But it may, as global experiences suggest, serve to reduce deep bankruptcy cases that would only be to the collective detriment of all stakeholders.
CIRP vs. CIIRP
Other welcome changes include a check on dissenting creditors from holding out for larger payouts, and a bar on resolution professional from also acting as liquidator if resolution fails. By binding the National Company Law Tribunal process to strict time schedules, the policymakers are making yet another bid to expedite the salvaging of assets. All this is aimed at improving resolution efficiency, which is paramount to the IBC’s efficacy, but the policy and regulatory measures must be guided by overarching objectives like prevention of undue appropriation of capital by a few powerful actors, and fostering overall economic justice. In fact, these are the IBC’s raison d’être. The recent judicial assertion that in real estate insolvencies, delivery of homes to the consumer must take precedence over distribution of the debtor’s asset among the creditors ought to be appreciated in this context.