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Rajya Sabha clears Insolvency and Bankruptcy Code Amendments

April 02, 2026 5 min read Economics Polity & Governance GS3 (Indian Economy Infrastructure) and GS2 (Parliament Governance)
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What Happened

  • The Rajya Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, completing the bill's parliamentary journey after the Lok Sabha passed it on March 30, 2026.
  • The government accepted 11 recommendations of the Select Committee headed by BJP MP Baijayant Panda, and also brought one additional government amendment.
  • The amendment bill is the most comprehensive set of reforms to the IBC framework since the original code was enacted in 2016.
  • Key changes include: introduction of a new Creditor-Initiated Insolvency Resolution Process (CIIRP), mandatory timelines for admitting applications, enabling provisions for group insolvency and cross-border insolvency, and stricter withdrawal conditions.
  • The Finance Minister piloted the bill in the Rajya Sabha, underscoring its significance for the government's credit market reform agenda.

Static Topic Bridges

The Insolvency and Bankruptcy Code, 2016: Origin and Architecture

The Insolvency and Bankruptcy Code (IBC), 2016 was a landmark reform that consolidated India's fragmented insolvency framework into a single, time-bound resolution mechanism. Prior to the IBC, insolvency proceedings were scattered across multiple laws — the Companies Act (2013), the Sick Industrial Companies (Special Provisions) Act (SICA), 1985, the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993, and the SARFAESI Act, 2002 — creating a multi-forum, multi-decade resolution environment. The IBC centralised these proceedings into the National Company Law Tribunal (NCLT) for corporates, with the Insolvency and Bankruptcy Board of India (IBBI) as the regulatory authority.

  • IBC mandated the Corporate Insolvency Resolution Process (CIRP) to be completed within 180 days, extendable to 330 days including litigation.
  • The Committee of Creditors (CoC) — comprising financial creditors — drives the resolution process; operational creditors have lesser voting rights.
  • As of 2025, over 7,000 cases had been admitted under IBC since its inception, with resolution plans approved in over 900 cases.
  • India's rank in the World Bank's "Resolving Insolvency" indicator improved dramatically post-IBC — from 136th in 2016 to significantly higher rankings in subsequent years.
  • IBBI (Insolvency and Bankruptcy Board of India) was established under the IBC as the nodal regulator for resolution professionals, insolvency professional agencies, and information utilities.

Connection to this news: The 2025 Amendment addresses gaps and practical challenges that emerged in IBC's first decade of operation — particularly on admission delays, group insolvencies, and the need for an alternative resolution pathway for financially stressed but viable companies.

Key Amendments in the IBC (Amendment) Bill, 2025

The 2025 Amendment Bill introduces 12 changes to the IBC, addressing both procedural delays and structural gaps. The most significant innovation is the Creditor-Initiated Insolvency Resolution Process (CIIRP) — an alternative to the existing CIRP that allows financial creditors holding at least 51% voting consent to jointly initiate proceedings while allowing the debtor's Board of Directors to remain in control under the supervision of the Resolution Professional. This "debtor-in-possession" approach is designed for companies that are stressed but have viable management, reducing the disruption caused by management displacement under CIRP.

  • CIIRP must be completed within 150 days, extendable by 45 days — faster than the 330-day CIRP outer limit.
  • Applications under Sections 7 (financial creditors), 9 (operational creditors), and 10 (company itself) must now be admitted or rejected within 14 days; delays must be recorded in writing.
  • Withdrawal from CIRP is now permitted only after the Committee of Creditors is constituted, requires 90% CoC vote, and is allowed only before the first call for resolution plans — tightening a previously exploited loophole.
  • Group insolvency provisions allow joint creditor committees, a common Insolvency Professional, and joint hearings for interconnected companies in the same corporate group.
  • Cross-border insolvency framework enables Indian courts to coordinate with foreign insolvency proceedings for companies with transnational assets and liabilities.

Connection to this news: The CIIRP, group insolvency, and 14-day admission timeline are direct responses to the most criticised aspects of IBC's implementation — management disruption, inability to handle conglomerate failures, and admission delays that extended effective resolution timelines.

Parliamentary Committee System and Select Committees

The parliamentary Select Committee process is a critical mechanism for improving legislation before it is finally enacted. A Select Committee is constituted by a House (Lok Sabha or Rajya Sabha) to examine a specific bill in detail — taking evidence from stakeholders, conducting expert consultations, and submitting a report with recommendations before the bill returns for final passage. For the IBC Amendment Bill, a Select Committee chaired by Baijayant Panda examined the bill extensively, submitting 11 recommendations. The government accepted all 11, plus introduced one amendment of its own — demonstrating a constructive engagement between the executive and the legislature. This is distinct from a Joint Parliamentary Committee (JPC), which involves members of both Houses.

  • Select Committees are provided for under Rules 96 and 97 of the Lok Sabha Rules of Procedure and Conduct of Business.
  • The IBC Amendment Bill's Select Committee comprised 24 members and submitted its report on December 17, 2025.
  • A Rajya Sabha Select Committee could also have been constituted — but this was a Lok Sabha Select Committee whose recommendations were then incorporated before Rajya Sabha passage.
  • Parliamentary committee reports are tabled in the House before the bill is taken up for further discussion, allowing members to study committee findings.
  • All 11 Select Committee recommendations accepted by government signals a high degree of legislative-executive consensus — unusual and notable for a complex economic legislation.

Connection to this news: The full acceptance of the Select Committee's 11 recommendations reflects how the parliamentary scrutiny process substantively improved the bill — with provisions like the CIIRP and group insolvency framework refined based on committee consultations with industry, legal experts, and IBBI.

Key Facts & Data

  • IBC (Amendment) Bill, 2025 passed Lok Sabha on March 30, 2026; Rajya Sabha passage on April 1-2, 2026.
  • Select Committee: chaired by Baijayant Panda; 24 members; report submitted December 17, 2025.
  • 11 Select Committee recommendations accepted + 1 government amendment = 12 total changes to IBC.
  • New CIIRP: initiated by financial creditors with 51% voting consent; Board remains in control; must complete within 150 days (extendable by 45 days).
  • Section 7/9/10 applications: must be decided within 14 days; delays to be recorded in writing.
  • CIRP withdrawal: requires 90% CoC vote; only before first call for resolution plans.
  • Group insolvency: joint creditor committees, common IP, single bench hearing for interconnected companies.
  • IBC enacted in 2016; NCLT is the adjudicating authority; IBBI is the regulatory body.
  • Over 7,000 cases admitted under IBC since 2016; resolution plans approved in 900+ cases.