The Insolvency and Bankruptcy Code (Amendment) Bill, 2025

Why in News? The primary aim of the IBC Amendment Bill, 2025, introduced by Finance Minister Nirmala Sitharaman on August 13, 2025, in the Lok Sabha, is to enhance the efficiency and speed of the insolvency resolution process under the Insolvency and Bankruptcy Code (IBC), 2016.

Relevance : Pre & Mains

Prelims :  IBC Amendment Bill, 2025

Mains  : GS 3 (Economy)

The key amis &  objectives:

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.

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.

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. Unresolved cases can convert to standard CIRP within 150 days.

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.

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.

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.

Key Provisions for Efficiency:

• 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.
• Streamlined CIRP: Expands resolution plan definitions to include asset sales, clarifies government dues priority, and restricts CIRP application withdrawals.
• 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.
• Additional Reforms: Include electronic portals, enhanced IBBI powers, and decriminalization of certain offenses to improve transparency and efficiency.