A Discussion Of The IBC Amendment Bill 2025

The Insolvency and Bankruptcy Code, 2016 (“IBC”) has been facing a lot of operational issues such as non-adherence to timelines which is the very essence of this legislation. There have been various judicial conflicts on the issues involving IBC. The liquidation process lacks supervision leading to low rate of asset recovery. Moreover, some of the issues which are majorly significant in a globalized economy such as cross border insolvency and group insolvency also lack enabling provisions and clear legislation. Therefore, in an attempt to cater to these issues, some of the changes are proposed through this impugned bill of 2025.

The following are the major highlights of the IBC Amendment Bill, 2025:

· The legislation aims to cater delays during the procedure of CIRP

· Clarifies that the statutory dues are not termed to be secured creditors

· The Bill also asserts the power of Committee of Creditors (“CoC”) to oversee the liquidation process and to also possess the power to remove and appoint liquidator

· Introduces Creditor Initiated Insolvency Resolution Process (“CIIRP”) which permits out of court commencement of insolvency proceedings by specified financial institutions

· The draft of this bill urges the government to legislate upon the issues of group insolvency and cross-border insolvency

The IBC Amendment Bill, 2025 addresses the most deliberated question of treating government debt as secured credit, which was also contested under the Rainbow Papers case. It clearly specifies that a security interest is indispensable for treating a debt as a secured debt.

Further, to strengthen the timelines and strict adherence to the same, there are three requisites which have to be fulfilled for commencing Corporate Insolvency Resolution Process (“CIRP”) – (i) a default, (ii) duly filed application, and (iii) no disciplinary action against the Insolvency Professional. Once the application for CIRP is admitted, it can only be withdrawn after the consent of CoC is obtained for the same.

The newly floated concept of CIIRP is different from the existing CIRP mechanism – (i) limit on who can initiate, i.e., CIIRP cannot be initiated by each and every creditor but can only be initiated by certain specified financial institutions, (ii) CIIRP to be initiated out of court only, (iii) management and operation of the company do not shift i.e., remains with the debtor itself, (iv) CIIRP completion timeline is specified to be 150 days which can be extended by up to 45 days. A CIIRP can, however, be converted into a CIRP.

With the extension of powers of CoC, introducing the concept of CIIRP, focusing on the adherence of timelines, restricting withdrawal of CIRP, stressing upon to legislate on cross border and group insolvency, the IBC Amendment Bill, 2025 attempts for an overhaul of the Insolvency and Bankruptcy Code, 2016. It is further referred for scrutiny to a committee chaired by Jagdambika Pal which is expected to table its report in the next session.

Author: Adv. Varun Singh, Founder, Foresight Law Offices India. Views are personal.