Lok Sabha Passes IBC Amendment Bill 2025 to Strengthen Insolvency Framework and Boost Transparency

New Delhi | 30 March 2026 The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introducing a set of reforms aimed at improving India’s insolvency resolution system. The Bill incorporates recommendations from a Select Committee and proposes 12 key changes to make the process more efficient, transparent, and aligned with global practices. Presenting the Bill, Finance Minister Nirmala Sitharaman said the amendments are designed to address practical challenges faced since the implementation of the Insolvency and Bankruptcy Code, 2016. She highlighted that the revisions also take into account judicial interpretations and aim to ensure better governance while maximising value for all stakeholders involved. The Minister noted that the IBC has played a significant role in strengthening the banking sector by enabling the resolution of stressed assets. She informed the House that banks have recovered over ₹1.04 lakh crore through various mechanisms, with the IBC contributing more than half of this amount. This, she said, has helped improve the overall financial health of the system while keeping distressed companies operational. Among the major changes, the Bill proposes a creditor-led insolvency process for small companies with shorter timelines, provisions for out-of-court settlements, and a debtor-in-possession model that allows existing management to continue under strict safeguards. It also introduces frameworks for group and cross-border insolvency and mandates greater transparency by requiring the Committee of Creditors to record reasons for its decisions. These measures are expected to enhance investor confidence and streamline complex insolvency cases. Lok Sabha Passes IBC Amendment Bill 2025 to Strengthen Insolvency Framework and Boost Transparency The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introducing a set of reforms aimed at improving India’s insolvency resolution system. The Bill incorporates recommendations from a Select Committee and proposes 12 key changes to make the process more efficient, transparent, and aligned with global practices. Presenting the Bill, Finance Minister Nirmala Sitharaman said the amendments are designed to address practical challenges faced since the implementation of the Insolvency and Bankruptcy Code, 2016. She highlighted that the revisions also take into account judicial interpretations and aim to ensure better governance while maximising value for all stakeholders involved. The Minister noted that the IBC has played a significant role in strengthening the banking sector by enabling the resolution of stressed assets. She informed the House that banks have recovered over ₹1.04 lakh crore through various mechanisms, with the IBC contributing more than half of this amount. This, she said, has helped improve the overall financial health of the system while keeping distressed companies operational. Among the major changes, the Bill proposes a creditor-led insolvency process for small companies with shorter timelines, provisions for out-of-court settlements, and a debtor-in-possession model that allows existing management to continue under strict safeguards. It also introduces frameworks for group and cross-border insolvency and mandates greater transparency by requiring the Committee of Creditors to record reasons for its decisions. These measures are expected to enhance investor confidence and streamline complex insolvency cases.