What Happened
- The Union Cabinet approved amendments to the Insolvency and Bankruptcy Code (IBC), 2016, and the Companies Act, 2013, clearing the way for the IBC (Amendment) Bill to be introduced in the ongoing parliamentary Budget session.
- The amendments are primarily based on recommendations of a Select Parliamentary Committee chaired by BJP MP Baijayant Panda, which submitted its report in December 2025.
- Key proposed changes include stricter timelines for disposal of insolvency cases and enhanced powers for the Committee of Creditors (CoC) to drive faster resolution.
- Finance and Corporate Affairs Minister Nirmala Sitharaman indicated the Bill would be introduced in the second half of the Budget session.
- The amendments aim to address longstanding concerns about delays in the Corporate Insolvency Resolution Process (CIRP), with many cases exceeding the statutory 330-day maximum timeline.
Static Topic Bridges
Insolvency and Bankruptcy Code (IBC) 2016: Structure and Purpose
The Insolvency and Bankruptcy Code (IBC), 2016 consolidated a fragmented insolvency regime that previously spanned the Companies Act (2013), SARFAESI Act (2002), RDDBFI Act (1993), and the Sick Industrial Companies Act (SICA, 1985). The IBC created a single, time-bound, creditor-led resolution mechanism. Under the Corporate Insolvency Resolution Process (CIRP), a financial creditor (Section 7), operational creditor (Section 9), or the corporate debtor itself (Section 10) can initiate proceedings before the National Company Law Tribunal (NCLT). A moratorium is declared upon admission, suspending all legal actions against the debtor. The Committee of Creditors (CoC) — comprising financial creditors — then manages the process.
- IBC enacted: May 2016; it replaced or amended 11 previous laws.
- CIRP timeline under Section 12: 180 days from admission, extendable by 90 days (one-time), with an absolute outer limit of 330 days.
- CoC approval threshold: 66% of voting shares (reduced from 75% by 2019 amendment).
- Adjudicating Authority: NCLT (National Company Law Tribunal) for corporate insolvency.
- IBBI (Insolvency and Bankruptcy Board of India): the regulator, established under IBC Section 188.
- If no resolution plan is approved within the timeline, the company goes into liquidation.
Connection to this news: The 2026 amendments specifically target the gap between the 330-day outer limit and actual case resolution times — IBBI data shows a significant proportion of CIRP cases exceed 330 days, eroding the Code's creditor-recovery effectiveness.
Committee of Creditors (CoC): Role and Proposed Enhancements
The Committee of Creditors (CoC) under IBC is composed exclusively of financial creditors of the insolvent company. The CoC has decision-making authority over the resolution plan, including choosing between competing plans, approving liquidation, or even withdrawing the CIRP application (Section 12A, post-2018 amendment). The Select Parliamentary Committee recommended enhanced CoC powers — likely including greater flexibility to negotiate time extensions, pre-packaged settlements, and faster approval mechanisms — to reduce judicial bottlenecks at the NCLT.
- CoC does not include operational creditors (suppliers, employees) in voting — they have representation rights only.
- Pre-packaged insolvency (PPIRP) introduced in 2021 for MSMEs via IBC (Amendment) Act 2021: allows informal resolution before formal admission, capping CIRP to 120 days.
- Section 12A (2018 amendment): allows CoC to vote to withdraw CIRP by 90% majority.
- IBBI data (2024): average CIRP time exceeds 650 days; realisation for financial creditors averages 30–35 paise per rupee of admitted claims.
Connection to this news: Strengthening CoC powers directly addresses the twin problems of judicial delays at NCLTs and the inability of creditors to drive resolution without court intervention at every step.
Companies Act 2013 and Corporate Governance Reforms
The Companies Act, 2013 is the principal legislation governing incorporation, management, and dissolution of companies in India. Administered by the Ministry of Corporate Affairs (MCA) through the Registrar of Companies (RoC), it has been amended multiple times since 2013 to improve ease of doing business (decriminalisation of minor offences in 2019 and 2020 amendments), enable digital corporate processes, and strengthen accountability for directors and auditors. The 2026 amendments to the Companies Act (likely covering LLP provisions and corporate governance disclosures) complement IBC changes by addressing pre-insolvency corporate conduct.
- MCA21 portal: digital registry for all company filings under the Companies Act.
- The Companies (Amendment) Act, 2020: decriminalised 48 compoundable offences to reduce judicial burden.
- NCLT adjudicates matters under both Companies Act (mergers, oppression/mismanagement) and IBC (insolvency).
- India's ranking on World Bank Ease of Doing Business "Resolving Insolvency" indicator improved substantially after IBC — from 136 in 2016 to 52 in 2020 before WB discontinued the index.
Connection to this news: The parallel Companies Act amendment signals a holistic reform — addressing both the insolvency process (IBC) and the corporate governance framework (Companies Act) that enables early detection and prevention of insolvency.
Key Facts & Data
- IBC enacted: May 2016; consolidated 11 previous laws
- CIRP statutory timeline: 180 days + 90-day extension = 330-day outer limit (Section 12)
- CoC voting threshold: 66% of financial creditors' voting share
- Average actual CIRP duration (2024): approximately 650+ days
- Average creditor recovery under CIRP: approximately 30–35 paise per rupee of admitted claims
- IBBI: regulator established under IBC, 2016 (Section 188)
- NCLT: Adjudicating Authority for corporate insolvency
- Pre-Packaged Insolvency Resolution Process (PPIRP) for MSMEs: introduced 2021, capped at 120 days
- Select Committee chaired by: Baijayant Panda (BJP MP), report submitted December 2025
- Companies Act, 2013: administered by Ministry of Corporate Affairs (MCA)