SYLLABUS

GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context: A Select Committee of Lok Sabha after examining the IBC Amendment Bill 2025 submitted its report to the Parliament for the discussion.

Key Features of the IBC Amendment Bill 2025

• Creditor-Initiated Insolvency: The bill allows creditors to initiate insolvency resolution processes outside of court for genuine business failures, reducing the burden on the judicial system and enabling faster resolutions. 

• Group and Cross-Border Insolvency Frameworks: New provisions will facilitate coordinated resolution of companies within the same corporate group and align Indian practices with international norms for cross-border insolvency. 

• Procedural Discipline: A strict 14-day timeline for admission decisions will be enforced, with written reasons required for any delays. 

• Expanded the Role of Creditors: The amendments seek to empower creditors by clarifying their rights and roles in the insolvency process, thereby increasing their confidence in the system.

• Clarification in Definitions: The bill introduces clearer definitions regarding security interests, service providers, and avoidance transactions, which will help in reducing ambiguities in the application of the law. 

• Improved Oversight: The bill expands the oversight of the Insolvency and Bankruptcy Board of India (IBBI) to include more categories of professionals involved in insolvency processes, enhancing governance and compliance.

Key recommendations

• Insolvency appeals time limit: proposed fixing a three-month time limit for the National Company Law Appellate Tribunal (NCLAT) with amendment to the relevant section of the Code, to decide insolvency appeals. 

• Inclusive definition: definition of the term ‘service provider’ be suitably modified to include ‘registered valuer’ to the list of entities that are provided under the IBC, and the definition for ‘registered valuer’ be suitably inserted. 

• Widen resolution plan: On the corporate insolvency resolution process (CIRP), the committee proposed widening the definition of a resolution plan to allow more than one resolution plan for a corporate debtor undergoing CIRP.

Significance of IBC Amendment Bill 2025:

• Reducing resolution time to 6–7 months will lead to higher recoveries especially after the introduction of group insolvency.

• The strict timeline will help in Resolutions and liquidations within a year as stipulated by Law. 

• The “clean slate principle” and the strict timelines in the IBC process will help in improving the NPA situations.

• Widening the definition of a resolution plan in the corporate insolvency resolution process (CIRP) will allow more than one resolution plan for a corporate debtor undergoing CIRP.

• The bill seeks to modernize India's insolvency framework to meet international best practices, thereby improving investor confidence.