What Happened
- Parliament passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026 on April 1, 2026 to address systemic weaknesses that had accumulated since the IBC's original enactment in 2016.
- Finance Minister Nirmala Sitharaman stated the amendments target three pillars: faster case admission, statutory timelines for adjudicating authorities, and a stronger liquidation process.
- Key structural reform: the underutilised fast-track insolvency process is replaced with a creditor-initiated insolvency framework — allowing out-of-court initiation and settlements with a debtor-in-possession model under creditor supervision.
- The amendments introduce an enabling framework for group insolvency and cross-border insolvency, aligning India with global best practices.
- Avoidance transactions scope is expanded to cover a two-year window prior to insolvency admission — targeting promoters who divert assets or delay proceedings.
- Committees of Creditors (CoC) will now be required to record reasons for selecting a resolution applicant, enhancing transparency.
- The bill was introduced in the Lok Sabha on August 12, 2025, referred to a Select Committee (reported December 17, 2025), then passed by Parliament on April 1, 2026.
Static Topic Bridges
Insolvency and Bankruptcy Code, 2016 — Architecture and Purpose
The Insolvency and Bankruptcy Code (IBC), 2016 consolidated India's fragmented insolvency laws (SICA, BIFR, SARFAESI, Companies Act provisions) into a unified framework. Its central innovation was time-bound resolution: the Corporate Insolvency Resolution Process (CIRP) was to complete in 180 days (extendable by 90 days, capped at 330 days including court time). The National Company Law Tribunal (NCLT) serves as the Adjudicating Authority (AA).
- Three classes of applicants can initiate CIRP: financial creditors (Section 7), operational creditors (Section 9), or the corporate debtor itself (Section 10).
- An Insolvency Professional (IP) is appointed as the Interim Resolution Professional (IRP) to manage the company during CIRP.
- The Committee of Creditors (CoC) — comprising financial creditors — votes on resolution plans, with 66% approval required.
- The Insolvency and Bankruptcy Board of India (IBBI) regulates insolvency professionals, agencies, and information utilities.
Connection to this news: A decade of implementation revealed that the IBC's timelines were routinely breached — IBBI data showed 78% of ongoing cases exceeded 270 days, with average resolution taking 724 days. The 2026 amendments are a systemic response to this performance gap.
The Problem of NCLT Backlog and Delay
Despite the IBC's statutory timelines, the National Company Law Tribunal (NCLT) has been overwhelmed by a surge in insolvency filings. The tribunal has been understaffed relative to its caseload, contributing to massive delays in admission, hearings, and resolution approvals — undermining the IBC's core promise of time-bound insolvency resolution.
- As of 2025, average time for cases where a resolution plan was approved was approximately 724 days — more than double the statutory 330-day ceiling.
- A large number of companies in CIRP ended up in liquidation rather than resolution, eroding the value available to creditors and employees.
- NCLT has benches across major cities but faces a persistent vacancy problem at judicial and technical member levels.
- The 2026 amendment introduces statutory timelines specifically binding on adjudicating authorities — a direct attempt to fix judicial-side delay rather than just the corporate side.
Connection to this news: The new creditor-initiated framework and out-of-court settlement mechanisms are partly designed to reduce the number of cases landing in the NCLT — by resolving viable businesses before formal judicial proceedings begin.
Group and Cross-Border Insolvency — Filling Critical Gaps
Two major structural gaps in the original IBC were the absence of frameworks for (a) group insolvency — where multiple related companies collapse together (as in the Essar, Jet Airways, or IL&FS situations) — and (b) cross-border insolvency, where assets and creditors span multiple jurisdictions.
- Group insolvency: The original IBC treated each corporate entity separately, even if it was part of a larger conglomerate. This led to sub-optimal resolution outcomes when group entities had interlinked liabilities.
- Cross-border insolvency: India had no UNCITRAL Model Law framework, meaning foreign assets of Indian companies (or Indian assets of foreign firms) were difficult to recover in international insolvency proceedings.
- The Insolvency Law Committee (2018) and subsequent reports recommended adopting the UNCITRAL Model Law on Cross-Border Insolvency — the 2026 amendment finally introduces an enabling framework.
- Countries like the US (Chapter 15), UK, and Singapore already have cross-border insolvency regimes aligned with the UNCITRAL Model.
Connection to this news: By introducing frameworks for group and cross-border insolvency, India signals readiness to handle large, complex insolvency cases that involve multinational companies — a key step toward making India an attractive destination for foreign investment.
Avoidance Transactions and Promoter Accountability
A recurring problem in Indian insolvency proceedings has been asset-stripping by promoters — where company assets are transferred, pledged, or sold at undervalue in the period leading up to insolvency, leaving creditors with depleted estates to recover from.
- The original IBC included provisions for "preferential transactions" (Section 43), "undervalued transactions" (Section 45), and "fraudulent trading" (Section 66) — but covered only a one-year look-back period in most cases.
- The 2026 amendment expands the avoidance transactions scope to two years prior to insolvency admission — giving resolution professionals and creditors more time to unwind harmful pre-insolvency transfers.
- This aligns with the US Bankruptcy Code's two-year look-back period for fraudulent transfers (11 U.S.C. § 548).
- Expanding this window is particularly targeted at promoter-driven companies where related-party transactions are common.
Connection to this news: The expanded avoidance period directly addresses one of the most common creditor complaints: that by the time insolvency is filed, key assets have already been drained by promoters — making recovery insufficient despite a successful resolution process.
Key Facts & Data
- IBC enacted: 2016; consolidated multiple earlier insolvency laws.
- Statutory CIRP timeline: 180 days + 90-day extension = 330-day maximum (including litigation).
- Actual average resolution time (pre-2026): ~724 days — more than double the statutory ceiling.
- IBBI data: 78% of ongoing CIRP cases had exceeded 270 days (pre-amendment).
- IBC Amendment Bill 2026: Introduced Lok Sabha August 12, 2025; Select Committee report December 17, 2025; Passed April 1, 2026.
- Key changes: Creditor-initiated framework, group/cross-border insolvency, expanded avoidance transactions (2-year window), mandatory CoC reasoning.
- Adjudicating Authority: NCLT (National Company Law Tribunal).
- Regulator: IBBI (Insolvency and Bankruptcy Board of India).