Nine years ago, the Insolvency and Bankruptcy Code (IBC) fundamentally changed how India dealt with distressed companies, NPAs, and creditor rights. The Code introduced speed, discipline, and certainty in a system once plagued by delays and weak recovery mechanisms.
As we approach a decade of IBC, it’s the right moment to reflect — What has worked? What hasn’t? And what must be reformed in 2025 to unlock the next stage of India’s insolvency ecosystem?
Here is a grounded, practitioner-friendly analysis based on real experiences, market behaviour, and evolving jurisprudence.
What Worked: The Successes of IBC
1. Shift of Control From Promoters to Creditors – A Game Changer
For the first time, defaulting promoters lost automatic control. Creditors, through the CoC, now decide the company’s future. This has improved:
- repayment discipline
- financial governance
- credit culture across sectors
The fear of losing control has prevented countless defaults from reaching insolvency.
2. Entry of Professional Resolution & Accountability
IBC introduced Resolution Professionals (RPs) and Liquidators — independent, accountable, and regulated. This professionalisation strengthened:
- transparency
- stakeholder confidence
- decision-making
RPs brought process discipline previously unseen in financial restructurings.
3. Time-Bound Resolution (Conceptually)
Although delays remain, the Code created a time-bound framework — a major correction to India’s earlier insolvency laws where cases ran for 10–15 years. Statutory timelines continue to act as a benchmark for:
- NCLT
- lenders
- resolution applicants
4. Homebuyers and Small Creditors Got a Voice
The Supreme Court and amendments recognised homebuyers as financial creditors. This was a social and legal milestone, ensuring:
- better protection
- priority in resolution
- accountability of builders
5. Strong Jurisprudence From SC & NCLAT
Over 3,000 judgments have clarified:
- Section 29A eligibility
- treatment of claims
- CoC powers
- value maximisation principles
- finality of resolution plans
- avoidance transactions
This strong judicial foundation stabilised the entire ecosystem.
6. Increase in Recoveries (Compared to Pre-IBC Era)
While not perfect, recoveries under IBC remain significantly higher than earlier mechanisms (like SICA/DRT). IBC enabled:
- quicker haircuts
- market-driven pricing
- sale of stressed assets
Large cases (ESSAR Steel, Bhushan Steel, Alok Industries) demonstrated the Code’s potential.
What Failed: The Persistent Bottlenecks
1. Huge Delays at NCLT – The Biggest Weakness
Despite strict timelines, the ground reality is:
- adjournments
- backlog
- insufficient benches
- judges overloaded with non-IBC matters
This is the single largest obstacle in IBC today.
2. Too Many CIRPs End in Liquidation
Over 50% of CIRPs still end in liquidation.
Reasons include:
- late admission
- lack of investors
- poor asset quality
- litigation
- promoter non-cooperation
Many companies enter CIRP after value destruction is already complete.
3. Avoidance Transactions Drag On for Years
Sections 43–51 & 66 matters have:
- slow adjudication
- complex forensic analysis
- unclear recovery timelines
They slow down both CIRP and liquidation.
4. Operational Creditors Still Feel Secondary
Despite legislative intent, OCs often receive:
- low recoveries
- reduced participation
- complex claim verification processes
This creates dissatisfaction and frequent litigation.
5. Government Authorities Still Raise Obstacles
Statutory bodies often:
- attach assets
- raise inflated claims
- ignore moratorium
- delay NOCs
This undermines the uniformity of IBC’s mechanism.
6. Lack of Data Access for RPs
Promoters often withhold:
- books
- ERP data
- passwords
- stock records
Even after NCLT orders, cooperation remains a challenge.
7. Real Estate Insolvency Is Still Messy
Despite homebuyer recognition:
- projects stall for years
- land title issues remain
- multiple regulators overlap (IBC, RERA, Consumer Court)
There is still no cohesive real estate insolvency model.
What Needs Overhaul in 2025: The Next Phase of Reform
1. Dedicated IBC Benches & E-Adjudication
India needs:
- exclusive IBC courts
- digital case management
- virtual benches
- AI-enabled cause listing
This will be the single biggest improvement in reducing delays.
2. Early Warning & Pre-Admission Mechanism
IBC starts after value destruction. We need:
- pre-insolvency mediation
- early intervention frameworks
- lender-led restructuring
This will reduce unnecessary CIRPs.
3. Mandatory Digital Data Handover to RPs
A centralised data room connected to:
- MCA
- GST
- Income Tax
- EPFO
- Banks
would end promoter non-cooperation.
4. Standardized Digital Claims Processing
Claim verification must become:
- automated
- standardised
- API-enabled
- tamper-proof (blockchain)
This will drastically cut timelines.
5. Clear Framework for Avoidance Transactions
Avoidance matters need:
- dedicated NCLT benches
- strict timelines
- liability on wrongdoers
- clarity on distribution of recoveries
This will restore creditor confidence.
6. Real Estate Insolvency Reform
India needs:
- separate real estate insolvency chapter
- clear coordination with RERA
- project-wise insolvency
- homebuyer protection at the centre
Strengthened Role & Protection for RPs
Given increasing complexity, RPs need:
- safe harbour for good faith actions
- access to tech tools
- training for digital insolvency
- reduced personal liability risks
Conclusion: The Next Decade Must Be About Efficiency + Technology
IBC succeeded in changing India’s credit culture, but the next stage requires deeper structural reforms, particularly in:
- adjudication speed
- digital transformation
- accountability
- early intervention
- real estate
As the IBC Amendment Bill 2025 comes into play, the opportunity to build a stronger, faster, and technology-enabled insolvency ecosystem is greater than ever. India’s next decade of insolvency reform must be about speed, transparency, digitalisation, and value maximisation — not just process compliance.
*****
Author Note: The author is an Insolvency Resolution Professional with extensive experience in managing multiple CIRP and liquidation assignments. For queries or professional discussions related to the Insolvency and Bankruptcy Code (IBC), you may reach out to: Krit Narayan Mishra at kritmassociates@gmail.com | +91 99108 59116.
Author Bio
