Insolvency and Bankruptcy Code (Amendment) Bill, 2026

Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, introducing significant reforms to strengthen India’s insolvency resolution framework and improve ease of doing business.

The Insolvency and Bankruptcy Code (IBC), enacted in 2016, provides a time-bound mechanism to address corporate defaults either through resolution or liquidation. The latest amendments aim to streamline processes, enhance creditor confidence, and align India’s insolvency regime with global standards.

Key Highlights of the Amendment

Mandatory Admission by NCLT: The National Company Law Tribunal (NCLT), which oversees insolvency proceedings, is now required to admit applications once a default is established. Earlier, it had 14 days to decide on admission, often leading to delays.

Introduction of CIIRP: A major reform is the introduction of the Creditor-Initiated Insolvency Resolution Process (CIIRP)—an out-of-court mechanism allowing “specified financial creditors” to initiate insolvency. At least 51% of financial creditors must agree to trigger this process, reducing dependence on formal tribunal proceedings.

Boost to Pre-Pack Mechanism (PPIRP): The Bill lowers the voting threshold for the Pre-Packaged Insolvency Resolution Process (PPIRP) to 51%. Designed primarily for MSMEs, PPIRP enables a debtor-in-possession model where restructuring plans are negotiated with creditors before submission to NCLT, typically within 120 days.

Group and Cross-Border Insolvency Framework: For the first time, the Bill introduces provisions for group insolvency and cross-border insolvency, aimed at handling complex corporate structures and foreign assets, thereby boosting investor confidence.

Strengthening Role of IBBI: The Insolvency and Bankruptcy Board of India (IBBI) has been empowered to set timelines and standards for the Committee of Creditors, enhancing procedural efficiency.

Recognition of ‘Clean Slate’ Principle: The amendment formally recognises the clean slate principle, ensuring that claims not included in an approved resolution plan are extinguished, providing certainty to successful resolution applicants.

Time-bound Liquidation: A strict timeline of 180 days has been set for completion of liquidation, extendable by up to 90 days by the adjudicating authority.