The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introduced in the Lok Sabha with much fanfare, has been projected as a watershed reform to address India’s protracted insolvency woes. The promise is alluring: faster resolution timelines, a creditor-initiated insolvency mechanism, and new frameworks for group and cross-border insolvencies. Yet, beneath the headline features, the IBC amendment bill appears to be no more than incremental tinkering. What India needs is not patchwork, but a complete overhaul that aligns its insolvency regime with the best global practices.
When the IBC was first enacted in 2016, it was hailed as a landmark law that would resolve insolvency in a time-bound manner. Yet, the average time taken for admitting an application has stretched to over 434 days — longer than the intended time for an entire resolution process.
The 2025 bill proposes to mandate admission of applications within 14 days if a default is established. But as former finance secretary SC Garg has pointed out, setting timelines is easy; adhering to them in the face of overloaded tribunals, procedural roadblocks, and endless appeals is the real challenge. Unless institutional bottlenecks in the National Company Law Tribunal (NCLT) are resolved, the law will remain hostage to the ingenuity of lawyers and the delays of the system.
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Creditor-led resolution
One of the central features of the bill is the Creditor-Initiated Insolvency Resolution Process (CIIRP), designed as an out-of-court settlement for genuine business failures. On paper, it promises efficiency, allowing lenders to make faster commercial decisions. In practice, it risks becoming a double-edged sword.
India has already witnessed cases where creditors agreed to resolutions with haircuts of 90–95 per cent, raising questions about collusion and abuse. By vesting greater powers in financial creditors without strong safeguards, the amendments may perpetuate rather than resolve the moral hazards inherent in the system.
Group and cross-border insolvency
The bill’s enabling provisions for group insolvency and cross-border insolvency are being touted as second-generation reforms. India certainly needs them. Cases such as IL&FS and Videocon have highlighted the inefficiency of fragmented proceedings across multiple subsidiaries. Similarly, in an increasingly globalised economy, the lack of a framework for cross-border insolvency has deterred foreign investors.
The amendment provides for enabling provisions, but little else. Detailed rules are to be framed later, leaving critical aspects—such as reciprocity with other jurisdictions, recognition of foreign judgments, and coordination mechanisms—uncertain. Without embedding the UNCITRAL Model Law on Cross-Border Insolvency into the statute, India will continue to lag behind peers like Singapore and the UK, which have already harmonised their frameworks with international best practice.
Governance provisions: Strengthening or cosmetic
The bill empowers the Committee of Creditors (CoC) to supervise liquidation, replace liquidators, and establish monitoring committees. These changes are welcome, but they remain cosmetic in the absence of deeper governance reforms. The functioning of CoCs has been marred by opacity, unequal treatment of creditors, and lack of accountability.
Merely extending their powers without ensuring transparency and fiduciary responsibility could make matters worse. In high-profile cases such as Bhushan Steel, judicial interventions have repeatedly exposed the weaknesses of creditor-driven governance under the current framework.
Learning from global practices
A robust insolvency regime is one that balances speed, fairness, and predictability. In this regard, India can learn from global peers. The U.S. Chapter 11 framework allows for debtor-in-possession, where promoters retain control under court supervision, facilitating restructuring rather than liquidation. Singapore has embraced the UNCITRAL Model Law and created specialised benches for insolvency, dramatically improving investor confidence.
The UK has introduced “pre-pack” administrations to preserve business value while protecting creditor rights. India’s amendment bill borrows selectively from these models but fails to embed them systematically. By retaining an ad hoc, court-dependent approach, the reforms may not inspire the confidence of global investors or domestic businesses.
IBC amendment bill needs an overhaul
The IBC has had notable successes since 2016, recovering nearly ₹3 lakh crore of distressed assets. But it has also been plagued by inconsistency, litigation, and prolonged delays. The 2025 amendments attempt to plug some gaps, but they do not address the fundamental shortcomings of the system. A genuine overhaul would require:
- Embedding the UNCITRAL Model Law to ensure cross-border credibility.
- Strengthening institutional capacity by expanding NCLT benches and deploying specialised insolvency judges.
- Introducing debtor-in-possession provisions to preserve value in viable businesses.
- Creating pre-pack frameworks for faster resolution of small and medium enterprises.
- Ensuring transparency and accountability in CoC decisions through independent oversight.
The 2025 amendment bill, in its current form, may reduce some delays and improve creditor participation. But it is at best a halfway house. To truly deliver on the promise of the IBC, India must undertake comprehensive reforms that align with global standards.
This means reimagining insolvency as a mechanism for revival, not merely liquidation; for fairness, not just creditor control; and for predictability, not protracted litigation. Anything less will be yet another round of patchwork that fails to fix the fabric of India’s insolvency regime.