In a major legislative reform, the Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026 (‘Amendment Bill’). The Amendment Bill introduces a significant overhaul to the Insolvency and Bankruptcy Code, 2016 (‘Code’). The widespread changes extend to introducing a new Creditor-Initiated Insolvency Resolution Process (‘CIIRP’), streamlining timelines, protecting the rights of secured creditors, and addressing certain judicial precedents.

We are also delighted to report that the insolvency regulator, the Insolvency and Bankruptcy Board of India, has released yesterday (i.e. April 2, 2026) a committee report with proposed amendments of the regulations to reflect the changes in the Code and also regulations for the CIIRP regime. The speed shown by the regulator is very encouraging and reflects the commitment of the government to these important changes and of course to the Code.

Key amendments under the Amendment Bill include:

i.    Reiteration that the only thresholds relevant for admission of insolvency applications (filed by a financial creditor) are: (a) existence of debt; and (b) existence of default. The Amendment Bill implicitly clarifies that other factors such as prospects of future profits, macroeconomic factors, and force majeure should not be considered by the National Company Law Tribunal (‘NCLT’);

ii.   Reiteration that for a ‘security interest’ to be valid under the Code, it must necessarily flow from transactional security contractually agreed to be created between parties, as opposed to a lien over assets of the corporate debtor created under any special law;

iii.  Prescription of minimum payout to dissenting financial creditors – which is the lower of: (a) liquidation value (i.e., the amount payable to such creditors in case of liquidation); or (b) resolution value (i.e., the amount payable to such creditors out of the resolution proceeds if such proceeds are distributed as per the statutory liquidation waterfall);

iv.   Provisions for enabling:

1. bifurcation of NCLT’s approvals for: (1) resolution plans; and (2) inter se distributions to approve and implement resolution plans in a timely manner notwithstanding inter se creditor disputes;
2. procuring approvals from the Competition Commission of India (‘CCI’) before submission of the resolution plan to the NCLT;

v.    Introduction of a CIIRP framework for certain categories of corporate debtors and creditors, which are yet to be notified by the Central Government;

vi.   Introduction of provisions enabling the Central Government to prescribe rules for group insolvency and cross-border insolvency cases; and

vii.  Introduction of provisions enabling the transfer of assets of corporate guarantors / personal guarantors in the Corporate Insolvency Resolution Process (‘CIRP’) of a corporate debtor.

Some of the key amendments are discussed in detail below:

i.    CIIRP

1. On the occurrence of a default and after serving due notice to the corporate debtor, CIIRP may be initiated against specific categories of companies to be notified by the Central Government, by financial creditors belonging to notified classes of financial institutions. Importantly, CIIRP cannot be initiated against a company: (1) for which a CIRP or liquidation has been commenced and is still undergoing; or (2) which has undergone a CIIRP, pre-packaged insolvency resolution process or CIRP, within the preceding three years. Unlike CIRP, CIIRP does not trigger an automatic moratorium and an application for moratorium must be made by the Resolution Professional (‘RP’) before the NCLT;
2. The initiating financial creditor appoints an insolvency professional as the RP, who must make a public announcement notifying the initiation of the CIIRP. While the RP performs duties analogous to those in a CIRP, a key distinguishing feature is that the corporate debtor’s management is not suspended and continues to remain vested in its board of directors or partners. The RP, however, retains significant oversight, including the right to attend all board meetings and, crucially, the power to veto any resolutions passed by the board;
3. The CIIRP must be completed within 150 days, extendable by a maximum of 45 days, which is significantly shorter than the CIRP timeline. A resolution plan requires approval by 66% of the Committee of Creditors (‘CoC’). If no resolution plan is approved within this timeframe, the process mandatorily converts to CIRP. Conversion to CIRP may also occur if: (1) the CoC resolves to do so by a 66% vote; (2) the NCLT finds that the CIIRP initiation was not in accordance with the provisions of the Code; (3) the NCLT is satisfied that the corporate debtor or its personnel have failed to cooperate with the RP; or (4) the NCLT rejects the resolution plan for being non-compliant; and
4. CIIRP represents a paradigm shift in Indian insolvency law and is expected to deliver significant benefits: it will eliminate protracted litigation at the admission stage since there is no requirement for the NCLT to adjudicate the question of default prior to commencement of CIIRP; it introduces a balanced debtor-in-possession model with adequate checks and balances; and it provides lenders with an effective out-of-Court restructuring route which offers a cross-class cramdown with a limited moratorium on any CIRP filings.

ii.   Recognition of Rights of Secured Creditors

1. The Amendment Bill proposes an explanation to the definition of ‘security interest’, clarifying that only security interests created pursuant to an agreement or arrangement by an act of two or more parties will qualify as valid security interests under the Code. Notably, security interests arising merely by operation of law will not be recognised;
2. This explanation negates the ability of Government authorities to claim the status of a ‘secured creditor’ based on special legislation. It addresses the Supreme Court’s (‘SC’) ruling in State Tax Officer v. Rainbow Papers (2022)^[1], which recognised that security interests in favour of Government authorities could be created by operation of law such that they would rank ahead of or at par with secured lenders under the Code; and
3. A further explanation is proposed to Section 53 of the Code, clarifying that a secured creditor will be treated as such only to the extent of the value of its security interest and no more. This amendment will prevent under-collateralised lenders from claiming to be secured for the entire amount of their debt.

iii.  Limiting Judicial Intervention at Admission Stage

1. The Amendment Bill proposes an explanation to Section 7 of the Code, clarifying that once the existence of a debt and default are established, no other intervening or attendant circumstances may be considered to admit or reject an application for initiating CIRP against the corporate debtor; and
2. This amendment addresses the SC’s judgment in Vidarbha Industries Power Limited v. Axis Bank Limited (2022)^[2], where it was held that even if the existence of debt and default are demonstrated, the NCLT has discretion in rejecting an application to initiate CIRP. The amendment will provide creditors with much-needed predictability in outcomes.

iv.   CCI Approval and Two-Stage Approval of Resolution Plans

1. The Amendment Bill proposes to amend Section 31(4) of the Code, permitting resolution applicants to obtain necessary approvals from the CCI prior to submitting their resolution plan to the NCLT, rather than prior to CoC approval. This allows applicants to seek regulatory clearances only when there is reasonable certainty of plan approval. It addresses situations such as the CIRP of Hindustan National Glass & Industries Limited (2025)^[3], where the SC rejected a resolution plan due to pending CCI clearances at the time the CoC approved the resolution plan; and
2. Additionally, the Amendment Bill proposes to add a proviso to Section 31(1) of the Code, permitting the NCLT to first approve implementation of a resolution plan, with the manner of distribution to be finalised within 30 days thereafter. This enables the NCLT to approve a resolution plan while continuing to deliberate on distribution matters, thereby facilitating quicker and more efficient resolutions.

v.    Group Insolvency and Cross-Border Insolvency

1. The Amendment Bill proposes enabling provisions for both cross-border insolvency and group insolvency, with the relevant rules to be notified by the Central Government; and
2. The notification of these rules will provide much-needed certainty for group insolvency proceedings, which have thus far relied on judicial pronouncements such as State Bank of India v. Videocon Industries Limited (2019)^[4]. Similarly, the absence of clear guidelines for cross-border insolvency has led to insolvency professionals having to rely on ad-hoc protocols, as seen in the CIRP of Jet Airways (India) Limited (2019)^[5].

vi.   Dealing with Assets of Personal and Corporate Guarantors

1. The Amendment Bill proposes to add Section 28A in the Code, enabling the transfer of assets belonging to personal or corporate guarantors during the CIRP of a corporate debtor to such company. This is permitted subject to the following conditions: (1) the creditor holding security over the guarantor’s asset has taken lawful possession of such asset; and (2) prior approval of the CoC has been obtained; and
2. In case the corporate guarantor is undergoing CIRP or liquidation, 66% approval of its CoC is required. In case the personal guarantor is undergoing insolvency or bankruptcy and the creditor has forfeited or surrendered his right in relation to an asset, approval of creditors holding more than three-fourths of the value is necessary. All amounts received from such asset transfers will form part of the guarantor’s insolvency or bankruptcy estate. This provision is likely to enhance price discovery, particularly where the assets of the corporate debtor and the guarantor are intrinsically linked.

vii.  Restoration of CIRP

1. The Amendment Bill proposes to add sub-section (1A) to Section 33 of the Code, enabling the CoC to apply to the NCLT for restoration of the CIRP before a liquidation Order is passed, where either no resolution plan was approved within the statutory timeline or the plan was rejected by the NCLT under Section 31 of the Code; and
2. The NCLT may restore the process for a period not exceeding 120 days, and this restoration may be exercised only once.

viii. Clean Slate Principle

1. The Amendment Bill proposes to add sub-sections (5) and (6) to Section 31 of the Code, which codify the ‘clean slate principle’; and
2. The proposed Section 31(5) of the Code protects licences, permits, and grants associated with the resolution plan from suspension or termination post-approval of the resolution plan and the proposed Section 31(6) of the Code provides that upon approval of the resolution plan, all prior claims against the corporate debtor and its assets will be extinguished (unless otherwise provided in the plan), and no proceedings should be continued or instituted on the basis of such claims.

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[1] (2023) 9 SCC 545

[2] (2022) 8 SCC 352

[3] (2025) 5 SCC 209

[4] 2019 SCC OnLine NCLT 745

[5] 2019 SCC OnLine NCLAT 1216