The Insolvency and Bankruptcy Code (Amendment) Bill, 2025

Why in News?

On August 13, 2025, Finance Minister Nirmala Sitharaman presented the IBC Amendment Bill, 2025, in the Lok Sabha, with the key objective of improving efficiency and accelerating processes of the insolvency proposed reforms feature the introduction of digital portals, strengthened IBBI authority, and the decriminalization of select violations to boost transparency and operational efficiency.

Relevance : Pre & Mains

UPSC Prelims :  IBC Amendment Bill, 2025

UPSC Mains : GS 3 (Economy)

The key aims &  objectives: The Insolvency and Bankruptcy Code (Amendment) Bill

1. Reducing Delays: Address the significant gap between the mandated 14-day timeline for admitting corporate insolvency resolution applications and the current average of over 434 days by amending Section 7 to mandate admission based solely on the existence of defaults, with information utilities providing sufficient evidence for financial institutions.
2. Strengthening Governance: Introduce structural and procedural reforms, such as expanding resolution plan definitions, restricting corporate applicants’ roles in proposing resolution professionals, clarifying priority of government dues, and tightening controls on withdrawal of Corporate Insolvency Resolution Process (CIRP) applications.
3. Introducing New Mechanisms: Establish a Creditor-Initiated Insolvency Resolution Process (CIIRP) to allow financial institutions to initiate insolvency outside court under a resolution professional’s supervision, with provisions for debtor management control and a 30-day objection period. Pending cases may be shifted to the standard CIRP process within 150 days.
4. Facilitating Group Insolvency: Introduce Chapter V-A for coordinated or consolidated insolvency proceedings for group companies, enabling shared benches, coordinated Committees of Creditors (CoCs), common professionals, and enforceable inter-company agreements to reduce duplication and maximize value.
5. Enhancing Cross-Border Insolvency: Introduce Section 240C to empower the government to frame rules for cross-border insolvency and designate dedicated benches, moving beyond bilateral arrangements.
6. Streamlining Processes: The IBC Amendment Bill, 2025, streamlines insolvency by introducing monitoring committees, empowering CoCs to oversee liquidation, removing personal guarantor moratoriums, and preventing fraud. It also establishes an electronic portal, enhances IBBI powers, and decriminalizes certain offenses.

Essential Measures to Enhance Efficiency: Amendments to the Insolvency and Bankruptcy Code

• Creditor-Initiated Insolvency Resolution Process (CIIRP): Allows financial institutions to initiate insolvency outside court, with resolution professionals overseeing the process and debtors retaining management control under supervision.
• Evidence-Based Admissions: Information utilities’ records serve as sufficient evidence for financial institutions, reducing admission timelines and value erosion.
• Simplified CIRP: Broadens the scope of resolution plans to cover asset sales, specifies the order of priority for government dues, and limits the withdrawal of CIRP applications.
• Group Insolvency Framework: Chapter V-A enables coordinated proceedings for group companies to minimize duplication and maximize value.
• Cross-Border Insolvency: Section 240C facilitates rules for cross-border cases and dedicated benches.

• Further reforms involve introducing digital portals, expanding the powers of IBBI, and decriminalizing select offences to boost efficiency and transparency.