New Delhi, (APAC Media): The Lok Sabha on Monday approved the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, by voice vote, aiming to streamline insolvency proceedings, reduce litigation-led delays, and enhance investor confidence.
The Bill replaces the underutilized fast-track process for small companies with a Creditor-Initiated Insolvency Resolution Process (CIIRP) featuring out-of-court initiation and a strict 150-day timeline.
“The original IBC framework has already been highly effective. Banks have recovered over Rs54,000 crore through insolvency proceedings; resolved firms have seen sales jump by 89%, and their market capitalisation has nearly tripled. These amendments will further strengthen the system, protect jobs, and improve economic stability.” Finance Minister Nirmala Sitharaman said.
The bill introduces several key measures to tackle delays caused by extensive litigation and parallel recovery efforts. Once a default is established, the adjudicating authority must admit applications within 14 days, without additional scrutiny for financial creditors.
Additionally, penalties ranging from Rs1 lakh to Rs2 crore are being imposed on individuals who initiate frivolous cases, aiming to prevent misuse and unnecessary court interventions.
“The amendments will ensure that once a resolution plan is submitted, the adjudicating authority is required to approve or reject it within 30 days. This compressed timeline is expected to significantly reduce bottlenecks and improve recovery rates for creditors,” FM added.
The new CIIRP framework allows debtors to remain in possession while creditors exercise control, ensuring operational continuity with necessary safeguards. The Bill also introduces provisions for group insolvency and cross-border insolvency, aligning domestic practices with global standards and boosting investor confidence in Indian markets.
According to ministry data, the credible threat of losing ownership has encouraged debtors to settle 32,179 cases prior to formal admission, covering underlying defaults worth Rs 14.62 lakh crore.
The IBC has also positively impacted corporate credit ratings. In FY 2017-18, for every one company resolved, five went into liquidation. By FY 2024-25, this ratio has improved to nearly one-to-one, reflecting the effectiveness of the framework.
Highlighting the broader economic benefits, Sitharaman expressed, “By enabling quicker resolutions and protecting enterprise value, these reforms will not only aid banks in recovering stressed assets but also provide a more predictable environment for investors, supporting overall economic growth.”
Discussion about this post