Indiaโs Insolvency and Bankruptcy Code (IBC), 2016, is set for a transformative change with the 2025 Amendment Bill. The bill for Insolvency and Bankruptcy Code (Amendment) Act, 2025 was tabled in the Lok Sabha on August 12, 2025.
๐๐ฆ๐บ ๐๐ฉ๐ข๐ฏ๐จ๐ฆ๐ด ๐๐ฏ๐ต๐ณ๐ฐ๐ฅ๐ถ๐ค๐ฆ๐ฅ
1. ๐๐ซ๐๐๐ข๐ญ๐จ๐ซ-๐๐ง๐ข๐ญ๐ข๐๐ญ๐๐ ๐๐ง๐ฌ๐จ๐ฅ๐ฏ๐๐ง๐๐ฒ ๐๐๐ฌ๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง ๐๐ซ๐จ๐๐๐ฌ๐ฌ The bill introduces a new out-of-court mechanism under a new Chapter IV-A called the โCreditor-Initiated Insolvency Resolution Processโ for corporate debtor with assets/income/amount of debt/other category as would be prescribed by the Central Government. This will allow financial creditors to initiate insolvency proceedings without court intervention for small businesses.
2. ๐๐ซ๐จ๐ฎ๐ฉ ๐๐ง๐ฌ๐จ๐ฅ๐ฏ๐๐ง๐๐ฒ ๐ ๐ซ๐๐ฆ๐๐ฐ๐จ๐ซ๐ค A new framework for โGroup Insolvencyโ is proposed under Chapter V-A to handle complex corporate structures. This aims to reduce the initiation of multiple proceedings in fragmnets.
3. Cross-Border Insolvency The bill lays the foundation for cross-border insolvency, aligning with international best practices. It empowers the Central Government under Section 240C to prescribe rules for administering proceedings involving foreign jurisdictions.
4. ๐๐ญ๐ซ๐๐ง๐ ๐ญ๐ก๐๐ง๐ฌ ๐๐ฏ๐จ๐ข๐๐๐ง๐๐ ๐๐ง๐ ๐ ๐ซ๐๐ฎ๐ ๐๐ซ๐จ๐ฏ๐ข๐ฌ๐ข๐จ๐ง๐ฌ The Bill significantly modifies the look-back periods for preferential, undervalued, and extortionate transactions under Section 47 of the IBC, 2016. Firstly, it shifts the threshold for calculating the look-back period from the Insolvency Commencement Date (ICD – the date the application is admitted) to the Initiation Date (the date the application for initiating the Corporate Insolvency Resolution Process is filed). Secondly, it explicitly includes the period between the Initiation Date and the ICD within the look-back window for such transactions.
Furthermore, the Bill empowers creditors to apply directly to the Adjudicating Authority for avoidance of such transactions if the Resolution Professional fails to act.
5. ๐๐ข๐ ๐ข๐ญ๐๐ฅ ๐๐ง๐ ๐๐ซ๐จ๐๐๐๐ฎ๐ซ๐๐ฅ ๐๐๐๐จ๐ซ๐ฆ๐ฌ An electronic portal will be introduced for insolvency processes, ensuring transparency and efficiency.
A copy of the Bill is enclosed.
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