INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) BILL, 2025

NEWS: The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 was passed in Rajya Sabha.

ABOUT

• To address procedural delays, uncertainty in recovery outcome, and ambiguity from judicial judgements.
• Seeks to introduce an alternate insolvency resolution process for companies+ frameworks for group insolvency and cross-border insolvency proceedings.
• Nodal Ministryà Ministry of Finance.
• Expedite Timelines+ Mandates a NCLT admission window+ stricter 180-day liquidation deadlines to eliminate procedural delays.
• Maximise Asset Valueà Extends the “look-back” window for fraudulent transactions + speeds up cases to prevent the loss of asset worth.
• Introduces out-of-court resolution (CIIRP) + gives creditors more control over the liquidation process and liquidator appointments.
• Formalises “clean-slate” rules for new buyers+ aligns group or cross-border insolvency with international standards.

Key Features

• Admission of Corporate Insolvency Resolution Process (CIRP)à NCLT must admit CIRP if default is proven, the application is complete, and the RP has no disciplinary issues.
• No other grounds for rejection are allowed
• Reasons must be recorded if no order is passed within 14 days, and records from information utilities are sufficient proof of default.
• Withdrawal of insolvency applicationsà permitted only after CoC is constituted and before the first invitation for resolution plans, requiring 90% approval of the CoC.
• Voluntary liquidationà can be withdrawn through a special resolution of shareholders
• The Bill gives CoC(Committee of Creditors (CoC)’s) the power to supervise liquidation, replacing the SCC’s advisory role.
• The liquidator will be appointed on the CoC’s proposal instead of automatically being the RP, and the CoC may also replace the liquidator.
• NCLT must pass a liquidation order within 30 days of application or intimation.
• Liquidation must be completed in 180 days, extendable by 90, while voluntary liquidation must conclude within one year.
• Creditor-Initiated Insolvency Resolution Process (CIIRP) àcan be initiated only by specified financial creditors outside court with at least 51% approval by value.
• The Bill à allows the government to make rules for group insolvency, including common benches, coordinated proceedings, shared professionals, and joint CoCs.