What Happened
- The Lok Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introducing a new pre-packaged insolvency mechanism alongside the existing Corporate Insolvency Resolution Process (CIRP).
- Finance Minister Nirmala Sitharaman announced that the amendment creates a new mechanism for pre-packaged insolvency — allowing financially stressed companies to negotiate a resolution plan with creditors before formally entering the insolvency process, reducing disruption and preserving enterprise value.
- A new Creditor-Initiated Insolvency Resolution Process (CIIRP) was introduced as an alternative track, allowing financial creditors with at least 51% of the debt to initiate and control a resolution without the traditional CIRP structure.
- The 14-day mandatory admission timeline means NCLT must admit or reject insolvency applications within 14 days of an established default, addressing a major source of delay.
- The bill extends the group insolvency and cross-border insolvency frameworks at an enabling level, with detailed rules to follow via IBBI regulations.
- The CoC must now record reasons for its decisions on resolution plans, enhancing governance and reducing post-approval litigation.
Static Topic Bridges
Pre-Packaged Insolvency — Concept and Global Practice
Pre-packaged insolvency (also called "pre-pack") is a restructuring model where a distressed company, its major shareholders, and key creditors negotiate and agree on a resolution plan before formally filing for insolvency. The formal insolvency proceeding is then used only for court approval of the pre-agreed deal, drastically reducing the time and cost of formal proceedings. Pre-packs originated in the UK and US bankruptcy practice and have been recognised as best practice by the World Bank's Doing Business framework.
- In the UK, pre-pack administrations are governed by the Insolvency Act 1986 and the Statement of Insolvency Practice 16 (SIP 16), which requires the administrator to justify the sale terms.
- India's PPIRP (2021) adapted the pre-pack model for MSMEs with defaults up to ₹1 crore, with a "debtor-in-possession" structure and Swiss challenge mechanism.
- The 2026 amendment refines the PPIRP and potentially expands the pre-pack concept to larger entities through the new CIIRP framework.
- Key advantage: The business continues to operate with minimal reputational damage; key employees, customers, and suppliers are less likely to flee during proceedings.
- Key risk: Pre-packs can disadvantage smaller or less-informed creditors if the negotiation is dominated by large secured creditors.
Connection to this news: The new pre-packaged mechanism expands India's insolvency toolkit beyond CIRP and PPIRP, offering flexibility to tailor resolution processes to the complexity and size of the distressed entity.
NCLT as Adjudicating Authority under IBC
The National Company Law Tribunal (NCLT) functions as the Adjudicating Authority for corporate insolvency under IBC. Established under Section 408 of the Companies Act, 2013, NCLT replaced the erstwhile Company Law Board and took over from the High Courts the jurisdiction over company law matters. For IBC purposes, NCLT benches across India handle applications to initiate CIRP, approve resolution plans, pass liquidation orders, and resolve disputes between parties.
- There are 16 NCLT Benches across India as of 2026, with the Principal Bench in New Delhi.
- NCLT orders under IBC are appealable to the National Company Law Appellate Tribunal (NCLAT) under Section 61 of IBC.
- NCLAT orders are further challengeable before the Supreme Court of India under Article 136.
- The 14-day mandatory admission timeline introduced by the 2026 amendment is a direct response to NCLT's historic delays in admitting insolvency applications — some cases took months or years before formal admission.
- Under Section 14, once NCLT admits a CIRP application, a moratorium is imposed — preventing creditors from initiating or continuing legal proceedings, foreclosures, or recovery actions against the corporate debtor.
Connection to this news: The 14-day mandatory admission window significantly reduces the pre-CIRP delay that has been eroding asset values before the formal resolution process even begins.
Cross-Border Insolvency — UNCITRAL Model Law Framework
Cross-border insolvency arises when a company with assets, creditors, or operations in multiple countries undergoes insolvency. The UNCITRAL Model Law on Cross-Border Insolvency (1997) provides a framework for cooperation between courts of different countries, recognition of foreign insolvency proceedings, and coordinated asset realisation. Over 60 countries have adopted the Model Law, including the UK, USA, Singapore, Japan, and South Korea.
- India has not formally adopted the UNCITRAL Model Law but has been working on it since the Insolvency Law Committee's recommendation in 2018.
- The Model Law provides for "main proceedings" (where the company's Centre of Main Interests, or COMI, is located) and "non-main proceedings" in other jurisdictions.
- Recognition of foreign proceedings allows foreign insolvency professionals access to domestic courts and assets.
- The 2026 IBC amendment creates an enabling framework for cross-border insolvency, with detailed rules to follow — a significant step towards formal Model Law adoption.
- Cross-border provisions are critical for resolving large corporate groups with global operations (e.g., shipping companies, conglomerates with overseas subsidiaries).
Connection to this news: The enabling cross-border insolvency framework in the 2026 amendment addresses a long-standing gap in IBC, which had no mechanism for coordinated resolution when debtor assets were located abroad or foreign creditors were involved.
Key Facts & Data
- Bill passed: IBC (Amendment) Bill, 2025 — Lok Sabha, March 30, 2026
- New CIIRP trigger: Financial creditors holding at least 51% of total financial debt
- Mandatory admission timeline: 14 days from establishment of default by NCLT
- PPIRP introduced: 2021 amendment (for MSMEs, defaults up to ₹1 crore, 120-day process)
- NCLT established: Under Section 408, Companies Act, 2013
- Number of NCLT benches: 16 across India (Principal Bench: New Delhi)
- Moratorium provision: Section 14, IBC — imposed on NCLT admission
- CIRP timeline: 180 days base + 90 days extension = 330 days outer limit (Section 12)
- UNCITRAL Model Law on Cross-Border Insolvency: adopted 1997; 60+ countries have adopted it
- Appeal structure: NCLT → NCLAT (Section 61) → Supreme Court (Article 136)
- IBBI (regulator): Established under Section 188, IBC, 2016; under Ministry of Corporate Affairs