The Central Government is preparing to bring a sweeping reform to the Insolvency and Bankruptcy Code (IBC) through an amendment bill expected to be tabled in the monsoon session of Parliament. According to two senior officials from the Ministry of Corporate Affairs, the IBC Amendment Bill is ready and may be sent to the Cabinet for approval by the end of April 2025.

If cleared, this bill is set to transform India’s insolvency resolution ecosystem, focusing on better recovery, faster processes, and inclusion of global best practices.

Key Provisions: Group Insolvency and Cross-Border Insolvency

Two of the most awaited components to be introduced are group insolvency and cross-border insolvency frameworks.

• Group insolvency will enable the clubbing of assets and liabilities of interconnected companies belonging to the same corporate group, thereby allowing consolidated resolution proceedings.

• Cross-border insolvency will provide a legal structure to deal with companies having assets and creditors in multiple jurisdictions, facilitating recognition and cooperation with foreign insolvency courts.

Currently, India lacks a formal cross-border insolvency framework, leading to legal gaps, such as in the Jet Airways case, where parallel proceedings in the Netherlands couldn’t be coordinated due to legal incompatibilities.

CLRP: A Creditor-Led Resolution Process

A significant part of the amendment is the Creditor-Led Resolution Process (CLRP).

• Under this framework, financial creditors can initiate resolution post-default by a corporate debtor.

• The process will involve minimal interference from adjudicating authorities (like NCLT), somewhat akin to pre-pack insolvency schemes for MSMEs.

This move is expected to streamline large corporate defaults and expedite the resolution process, something the current CIRP struggles to do efficiently.

New Approaches to Real Estate and Personal Guarantors

To address sector-specific concerns, the bill proposes project-wise resolution mechanisms in real estate cases. This will allow unaffected real estate projects to continue operations, preventing disruptions to homebuyers and project timelines.

Moreover, the bill could remove interim moratorium provisions related to personal guarantors' assets, which currently create legal uncertainty during insolvency proceedings.

Digital Case Management System for Transparency

In an attempt to modernize the system, the bill aims to implement a digital case management system.

This would ensure:

• Better documentation

• Faster case processing

• Reduced administrative burden on NCLT

Experts believe that digitalization would also improve transparency and reduce delays that plague India’s insolvency system.

Waterfall Mechanism and Decriminalisation

Another notable aspect is the introduction of a revised waterfall mechanism to determine the priority of distribution of resolution proceeds among stakeholders.

Also on the cards is the decriminalisation of certain offences under the IBC. This step is intended to encourage entrepreneurship, ease business operations, and reduce fear of legal entanglements.

Expert Opinions Backing the Amendments

Legal and insolvency experts have largely welcomed the impending changes.

• Ravi Mittal, Chairman of the Insolvency and Bankruptcy Board of India (IBBI), stressed that while the judiciary has tried to club group insolvency cases based on necessity, a statutory framework is crucial for consistent and effective implementation.

• Sudhaker Shukla, former IBBI Member, emphasized that group and cross-border insolvency are interlinked and must be addressed together for effective resolution of international corporate debt.

• Siddharth Srivastava, Partner at Khaitan & Co, pointed out the need for a legislative seal to tackle evolving complexities like group CIRPs and international creditor claims, citing the Videocon and Essar Steel insolvency cases.

• Deepika Kumari, Partner at King Stubb & Kasiva, said that CLRP will reduce NCLT’s caseload and help handle sectors like real estate with tailored resolution paths.

• Piyush Agarwal, Partner at AQUILAW, advocated for mandatory submission of a Statement of Affairs by defaulting companies. This would include employee records and financial data, helping resolution professionals (RPs) and committees of creditors (CoC) make faster and more informed decisions.

Why These Reforms Are Urgent

Since the introduction of IBC in 2016, India has seen landmark resolutions but also prolonged delays, lack of clarity in multi-jurisdiction cases, and sector-specific inefficiencies.

Cases like Jaypee, Amtek, Videocon, and Lanco reveal deep-rooted interlinkages between group companies that the current legal framework fails to adequately address.

The lack of cross-border insolvency laws further restricts India’s ability to work with international insolvency courts, posing risks of asset dissipation and stakeholder losses.

What’s Next?

With the Cabinet approval expected by April-end, the government is likely to table the IBC Amendment Bill in the upcoming monsoon session.

If passed, these amendments will:

• Reinforce creditor confidence

• Enhance investor trust

• Bring India closer to global insolvency best practices

This move is not just about fixing loopholes; it is aimed at future-proofing India’s insolvency law in a rapidly globalizing economy.

Conclusion

The IBC Amendment Bill 2025 stands at the cusp of becoming a milestone in India's corporate legal reforms. From group and cross-border insolvency to digitization and ease of doing business, the proposed changes aim to build resilience into the insolvency framework.

As India emerges as a global investment destination, a robust, transparent, and internationally aligned insolvency mechanism is not just an option—it’s a necessity.

The Upcoming IPOs in this week and coming weeks are Aten Papers & Foam.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.