The Insolvency and Bankruptcy Code (Amendment) Act, 2026 was passed by both Houses of Parliament as part of the legislative process for strengthening the insolvency framework. The Bill was first approved by the Lok Sabha, followed by its passage in the Rajya Sabha, after which it received the assent of the President on 6 April 2026 and came into force. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 aims to speed up insolvency resolution, strengthen creditor control, and improve efficiency in the insolvency framework.
Mandatory Timelines (Speed Focus)
The amendment introduces strict mandatory timelines to ensure faster resolution of insolvency cases. The National Company Law Tribunal (NCLT) is now required to admit or reject applications within a period of 14 days. Further, approvals relating to resolution plans, withdrawal of applications, liquidation, and dissolution must be completed within 30 days. In cases where these timelines are not met, the NCLT is required to record written reasons for the delay, thereby ensuring greater accountability and procedural efficiency.
Creditor-Initiated Insolvency Resolution Process (CIIRP)
The amendment introduces a new framework known as the Creditor-Initiated Insolvency Resolution Process (CIIRP) under Chapter IV-A, which allows financial creditors to resolve stress through an out-of-court mechanism that is legally recognised. This process can be initiated with the approval of at least 51% of the financial creditors and must be completed within a period of 150 days, extendable by a maximum of 45 days, making the total timeline 195 days. During this process, the management of the corporate debtor continues to remain with its existing management, but it is closely supervised by a resolution professional. In cases where the resolution fails, the process can be converted into a regular Corporate Insolvency Resolution Process.
Strengthening of Committee of Creditors (CoC)
The amendment significantly strengthens the role of the Committee of Creditors (CoC) by extending its authority beyond the resolution stage to also supervise the liquidation process. The CoC is now empowered to replace the liquidator with a 66% voting share, ensuring greater accountability in the conduct of liquidation. Overall, the CoC is given a more central role in the insolvency framework, with enhanced powers in decision-making, supervision, and approval of resolution plans, thereby reinforcing a creditor-driven process.
Resolution Plan Reforms
The amendment introduces important reforms in relation to resolution plans to ensure fairness and smoother implementation. It mandates equitable treatment for dissenting financial creditors, ensuring that their interests are adequately protected. The National Company Law Tribunal is now empowered to approve the implementation of a resolution plan first and decide on the manner of distribution at a later stage, thereby expediting the process. Further, once a resolution plan is approved, it safeguards the continuation of licenses, permits, and approvals associated with the corporate debtor, and also provides for the extinguishment of past claims against the corporate debtor, bringing greater certainty and finality to the resolution process.
Liquidation Reforms
The amendment introduces significant reforms to the liquidation process by enhancing the role of the Committee of Creditors , which now supervises the conduct of liquidation, thereby making the role of the liquidator more administrative in nature. It also prescribes a strict timeline for completion of liquidation within 180 days, with a possible extension of up to 90 days in appropriate cases. Importantly, the law now allows the Corporate Insolvency Resolution Process (CIRP) to be restored once, instead of directly proceeding to liquidation, thereby providing an additional opportunity for resolution. Further, stricter provisions have been introduced regarding the rights of secured creditors and the process of asset realisation to ensure greater transparency and efficiency.
Avoidance & Fraud Provisions Strengthened
The amendment strengthens the framework relating to avoidance and fraudulent transactions by providing greater clarity in the definition of such transactions. It empowers creditors to directly approach the Adjudicating Authority in cases where the resolution professional or liquidator fails to take action, thereby ensuring accountability in the process. Additionally, the look-back period for identifying such transactions has been effectively aligned to two years prior to the initiation date, enabling better detection and reversal of preferential, undervalued, or fraudulent dealings.
Withdrawal of Application (Section 12A Revised)
The amendment revises Section 12A relating to withdrawal of applications by introducing stricter conditions. Withdrawal is now permitted only after the constitution of the Committee of Creditors and before the issuance of the invitation for submission of resolution plans. Such withdrawal requires the approval of at least 90% of the voting share of the CoC, ensuring that the decision reflects a strong consensus among creditors. Further, the National Company Law Tribunal (NCLT) is required to dispose of the withdrawal application within a period of 30 days, thereby promoting timely decision-making.
Expanded Scope of Persons & Duties
The amendment expands the scope of individuals covered under the insolvency process by replacing the term “personnel” with the broader term “persons,” thereby including promoters, employees, and even those engaged through contracts or services. This wider definition ensures that all relevant individuals connected with the corporate debtor are brought within the ambit of the process. It also makes it mandatory for such persons to extend full cooperation and assistance to the Resolution Professional, thereby facilitating effective management and smooth conduct of the insolvency proceedings.
Moratorium & Guarantees Clarified
The amendment clarifies the scope of the moratorium by extending its application, in certain cases, to actions involving guarantors of the corporate debtor. This ensures that parallel proceedings against guarantors do not undermine the insolvency resolution process, thereby maintaining the stability and effectiveness of the overall framework.
Group Insolvency
The amendment introduces an enabling framework for group insolvency through the insertion of a new Chapter VA – Group Insolvency. This chapter recognises the need to deal with multiple related entities in a coordinated manner and empowers the Central Government to prescribe rules for conducting insolvency proceedings where two or more corporate debtors form part of the same group. The objective is to ensure better coordination, avoid conflicting decisions, and maximise the overall value of assets by considering interdependencies between group companies. This framework is particularly significant for complex corporate structures, where resolving entities individually may lead to inefficiencies and value erosion.
Other Key Changes
The amendment introduces several additional changes to improve efficiency and clarity in the insolvency framework. It removes certain quasi-judicial powers of the liquidator, thereby limiting the role to a more administrative and process-driven function. Sections 38 to 42 have been omitted to streamline the claims verification process and reduce procedural complexities. Further, in certain pre-packaged insolvency cases, the voting threshold has been reduced from 66% to 51%, making decision-making faster and more practical.
Conclusion
The 2026 amendment marks a shift towards a time-bound, creditor-driven, and efficient insolvency system. With strict timelines, introduction of CIIRP, and enhanced CoC powers, the law aims to reduce delays, preserve asset value, and improve recovery outcomes.
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