The Lok Sabha on 30 March 2026 passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introducing twelve structural amendments to India's insolvency framework. Finance Minister Nirmala Sitharaman moved the Bill, which seeks to accelerate case admissions, enable project-wise resolution in real estate, and establish a creditor-initiated process for smaller enterprises.
Background
The Insolvency and Bankruptcy Code, 2016 (IBC) has been India's principal insolvency statute for nearly a decade, but persistent delays in NCLT admissions and the absence of targeted mechanisms for real estate homebuyers and MSMEs had drawn criticism from stakeholders. The Bill was first introduced in the Lok Sabha on 12 August 2025 and was immediately referred to a Select Committee chaired by Baijayant Panda. The committee, after 49 sittings and extensive stakeholder consultations, submitted its report on 17 December 2025. The government accepted all recommendations of the Select Committee before moving the Bill for passage.
Key Provisions
The twelve amendments address several longstanding procedural and substantive gaps:
Mandatory 14-day admission timeline: Where a default is established through digital records from an Information Utility, the NCLT must admit or reject the insolvency application within fourteen days. If no order is passed within this period, the Tribunal must record reasons in writing.
Project-wise resolution for real estate: The Bill formally enables resolution of individual real estate projects without triggering insolvency for the entire corporate debtor. A developer with multiple projects can now have a single failing project resolved through CIRP while the remaining projects continue operations.
Creditor-Initiated Insolvency Resolution Process (CIIRP): A new out-of-court mechanism allows specified financial institutions to initiate insolvency proceedings with 51 per cent creditor agreement, replacing the earlier fast-track process with a framework tailored for smaller companies.
Statutory dues clarification: The Bill expressly provides that government dues do not carry the status of secured creditor claims, resolving an interpretational dispute that had produced inconsistent NCLT orders.
Liquidation oversight transfer: The Bill removes the liquidator's quasi-judicial authority over claims and transfers supervision to the Committee of Creditors, streamlining the liquidation process.
MSME-specific provisions: New Sections 240A and 29AC offer protections and exemptions specifically designed for micro, small, and medium enterprises, including shorter timelines and a debtor-in-possession model.
Cross-border insolvency framework: The central government is empowered to frame rules governing cross-border and group insolvency proceedings.
Implications for Practitioners
The 14-day admission rule is the most operationally significant change. Insolvency practitioners and financial creditors who have faced admission delays stretching into years at overburdened NCLT benches now have a statutory timeline to enforce. However, the practical impact will depend on whether NCLT infrastructure is augmented to handle the mandatory turnaround — the "record reasons in writing" fallback suggests the government anticipates that the deadline may not always be met.
The project-wise resolution mechanism addresses the most acute pain point in real estate insolvency: homebuyers in a developer's solvent projects were previously caught in a company-wide CIRP. Practitioners advising real estate developers and allottee committees should now assess whether individual project resolution offers a more favourable path than company-wide proceedings.
The CIIRP framework opens a significant new avenue for pre-packaged resolution outside formal NCLT proceedings. Corporate restructuring advisors should evaluate whether the 51 per cent creditor consent threshold makes out-of-court resolution viable for their mandates.
The Bill awaits passage in the Rajya Sabha before receiving Presidential assent.