• On August 12, 2025, the Centre introduced the Insolvency and Bankruptcy Code
(Amendment) Bill in the Lok Sabha, to address procedural delays and
streamlining the resolution process for companies and individuals.
• The Bill was initially referred to a Select Committee. Bill has a
total of 12 amendments to the IBC, including 11 recommended by the Select
Committee and one introduced by the government.
• The Honorable Finance Minister Nirmala Sitharaman said the Insolvency
and Bankruptcy Code (IBC) was never intended to function merely as a debt
recovery mechanism but as a framework to rescue viable businesses, resolve
financial stress and preserve enterprise value.
• She further said that the IBC has played a very crucial role in
improving the health of the country's banking sector, including the recovery of
more than 50% of their non-performing assets.
OUR VIEW:
The 2025 IBC Amendment Bill introduces a new form of Creditors'
Initiated Insolvency Resolution Process (CIIRP), offering lenders more say in
how to liquidate a business on the insolvency platform. As some analysts have
described, this is a less adversarial mechanism to resolve legitimate business
struggles since it offers creditors the right to initiate the process. In
recent years, the IBC platform has often been drawn out. CIIRP may be initiated
only by specified financial creditors. To initiate the process, at least
51 per cent of such creditors must agree (by value of debt). The Bill adds that
NCLT must pass the order for liquidation within 30 days from the date of the
application or intimation. It also specifies that liquidation proceedings
must be completed in 180 days, extendable by up to 90 days. Under the
Code, a company may apply for voluntary liquidation. The Bill specifies
that voluntary liquidation proceedings must be completed within one year. The
concern will now be how the Creditors Committee makes decisions and whether
those will be subject to judicial review. There appears to be a shift toward
assessing how fairly and transparently the resolution process operates, rather
than merely whether a matter is accepted on its merits. These are welcome
steps, as a high-profile tussle continues on the same issue between two
industrial groups on the Jaiprakash Associates Limited case.
It would also be interesting to find out how Courts interpret and
enforce the evolving standards for committee of creditors (CoC) decisions by
dissident creditors, say on claims of unjust distribution. This means that all
stakeholders need to change their perspective towards CIIRP from being just a
speed improvement, and ensure that their processes are sufficiently robust to
stand up to targeted judicial scrutiny under the legislation.
Remember that IBC has played a crucial role in improving the overall
health of India’s banking sector. According to the RBI’s Financial Stability
Report released in June 2025, Gross Non- Performing Assets of the banking
system have significantly declined, reaching a multi-decadal low of 2.3% at the
end of March.
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Related Article
Links: https://www.newsonair.gov.in/lok-sabha-passes-insolvency-and-bankruptcy-code-amendment-bill-to-address-interpretational-issues-among-stakeholders/
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