IBC Amendment Bill 2025: Key Reforms for Faster, Efficient Insolvency Resolution

Introduction

On August 12, 2025, Finance Minister Nirmala Sitharaman introduced the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 in the Lok Sabha. The Bill aims to address chronic delays in insolvency proceedings, strengthen governance, and streamline both corporate insolvency resolution and liquidation processes under the IBC, 2016. The legislation has been referred to a Select Committee for in-depth examination before its passage.

Need for the Amendment

Currently, the Corporate Insolvency Resolution Process (CIRP), which should be completed within 330 days (including litigation), often takes over 434 days on average, leading to value erosion of distressed assets. The amendment seeks to close procedural gaps, reduce litigation delays, and introduce new mechanisms for faster resolution.

Key Provisions of the IBC (Amendment) Bill, 2025

1. Creditor-Initiated Insolvency Resolution Process (CIIRP)

  • Introduces a new framework allowing creditors to initiate insolvency outside court under the supervision of a resolution professional.

  • The debtor may retain management control but under professional oversight.

  • Objections must be filed within 30 days.

  • If resolution is not achieved within 150 days, the case may be converted into a standard CIRP.

2. Faster Admission of Insolvency Applications

  • Section 7 amended to require admission based solely on proof of default.

  • Information utility records will serve as sufficient evidence for financial institutions.

  • Expected to cut down admission timelines drastically and prevent further asset deterioration.

3. Expanded Definition of Resolution Plans

  • Now includes asset sales as part of resolution strategies.

  • Restricts the corporate applicant’s role in proposing resolution professionals.

  • Clarifies the priority of government dues.

  • Tightens rules for withdrawing CIRP applications.

4. Stronger Monitoring & Oversight

  • Introduces monitoring committees for post-approval plan implementation.

  • Empowers the Committee of Creditors (CoC) to:

    • Oversee liquidation proceedings.

    • Replace liquidators with a two-thirds vote if necessary.

5. Group Insolvency Framework (New Chapter V-A)

  • Enables coordinated/consolidated insolvency proceedings for group companies.

  • Provisions for:

    • Shared NCLT benches.

    • Coordinated CoCs.

    • Common resolution professionals.

    • Enforceable inter-company agreements.

  • Designed to reduce duplication and maximize value recovery.

6. Cross-Border Insolvency

  • Section 240C empowers the Central Government to frame rules for cross-border insolvency.

  • Allows designation of dedicated benches.

  • Moves beyond the current bilateral arrangement system, enabling global cooperation in insolvency cases.

7. Additional Reforms

  • Removal of interim moratorium for personal guarantors.

  • Stronger measures to prevent fraudulent transactions.

  • Launch of an electronic portal for all IBC processes.

  • Enhanced regulatory powers for the Insolvency and Bankruptcy Board of India (IBBI).

  • Decriminalisation of certain IBC-related offences.

Impact & Way Forward

If enacted, the IBC Amendment Bill 2025 will:

  • Accelerate insolvency timelines.

  • Increase creditor confidence.

  • Reduce value destruction of distressed assets.

  • Enhance India’s ranking in ease of doing business and insolvency resolution.

By introducing CIIRP, group insolvency, and cross-border frameworks, India’s insolvency ecosystem will align more closely with global best practices.


Location: Pune, Maharashtra, India

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