Insolvency and Bankruptcy Code (Amendment) Bill, 2025

The Lok Sabha on March 30 passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, proposing wide-ranging reforms to strengthen India’s insolvency resolution ecosystem under the Insolvency and Bankruptcy Code, 2016.

The Bill incorporates recommendations of the Select Committee and introduces 12 key amendments aimed at addressing operational challenges and aligning the framework with global best practices. 

Key Features of the Amendment

• Creditor-Initiated Insolvency Process: Introduction of an out-of-court, creditor-led resolution mechanism, Designed for genuine business failures to enable faster and flexible resolution.

• Group Insolvency Framework: Provides for coordinated resolution of corporate groups, Aims to reduce value erosion caused by fragmented proceedings.

• Cross-Border Insolvency: Establishes a legal framework for handling insolvencies involving foreign jurisdictions, Enhances: Protection of stakeholder interests, Recognition of Indian proceedings abroad, Investor confidence .

• Clean Slate Principle Recognised: Claims not included in an approved resolution plan will be extinguished, Provides certainty to resolution applicants

• Time-Bound Liquidation: Liquidation to be completed within 180 days, Extendable by 90 days by the Adjudicating Authority

• Mandatory Admission Timeline: Insolvency applications to be admitted within 14 days once default is established

Significance

The amendments aim to: Maximise value realisation for stakeholders, Improve efficiency and governance in insolvency resolution, Strengthen India’s position as a predictable and investor-friendly insolvency regime.