Introduction
The insolvency regime of India is governed by the Insolvency and Bankruptcy Code, 2016 (“IBC”) which has been a major force in the resolution of corporate distress. As of April 2025, the amendments brought by the Insolvency and Bankruptcy Board of India (“IBBI”) to the Information Utilities (“IUs”) Regulations and the Information Memorandum (“IM”) requirements are effective from January and March 2025 respectively. These revisions essentially attempt to streamline the process of authentication of default information, while also mandating disclosures of carry forward losses which are mandated under the Income Tax Act, 1961.
While refining the authentication process of default information might sound inviting, such measures have still left a room for scrutiny on three levels. Firstly, will they help to ease the problem of structural delay in the Corporate Insolvency Resolution Process (“CIRP”), a framework designed to resolve the insolvency of corporate debtors? Secondly, are they calibrated to the practical realities of IUs? More fundamentally, do these reforms reflect a normative consensus on what is fair and efficient in insolvency resolution, or do they reflect a subtler cognitive rooming in the implementation of IBCs itself?
As a critical engagement with these questions, this article, interrogates the logic of legal and institutional forms of the amendments. It tries to decouple the assumptions in the regulatory discourse; assess the effects on stakeholders in terms of distribution and; whether the evolving arrangement of India’s insolvency framework is actually delivering the bedrock objective of timely, equitable and economically economical resolution of corporate distress.
Information Utilities Reform: Between Expedience and Norms
The Information Utilities Regulations, 2017, framed under the IBC, offers a structure which governs the operation of IUs essentially, being tasked with collecting, storing, authenticating, and providing financial information related to debt and defaults. Their primary purpose is to ensure that verified financial data (loan terms, security interests, default records) are easily accessible to stakeholders such as creditors, insolvency professionals and adjudicating authority.
This data is essential when initiating a insolvency proceeding under Section 7 or Section 9 of the IBC, where default is a precondition. A semantic recalibration with potential legal consequences, arising from the amendments is the shift from “deemed to be authenticated” to “deemed authenticated”. This is done to increase procedural integrity of default records, additional layers are added, including PAN based verification, e-signatures, and status dashboards.
However, these changes are still prone to disapproval from the public as from the viewpoint of regulatory design, the proposed amendments constitute a move toward hyper formalism in the default verification process. Procedural rigor is critical but the over specification of compliance mechanisms — especially those based largely on UIDAI or digital infrastructure — will alienate small scale debtors and under resourced IUs. The IBBI’s 2022 Annual Report highlights that approximately 1,700 CIRPs ended in liquidation due to challenges in addressing defaults, suggesting that excessive compliance requirements may contribute to inefficiencies rather than resolving them.
Additionally, there’s a presumption of debtor cooperation that guides such reforms to be naïve reason that these insolvency disputes are adversarial in nature. A comparative glance of prepack procedures and early engagement protocols deployed in jurisdictions like the UK, may call for India to question its reliance on certificate of default for authentication as a trigger.
Loss Disclosures in IMs: Insightful Planning or Regulatory Overkill?
This circular (IBBI/CIRP/83/2025) of the IBBI in which it mandates the inclusion of carry forward loss disclosures in the IM is intended to fill a significant lacuna in the regime of financial transparency of CIRPs. The disclosures would include the quantum and nature of tax losses, their time line of utilization under the Income Tax Act, 1961 and an affirmative statement in case no such losses exist. The directive seems to be founded on empirical gaps pointed out by IBBI, but its implementation poses critical issues.
From a normative perspective, the circular embodies an instrumentalist logic according to which, better financial data would help resolution applicants in developing more viable and competitive resolution plans. However, there is no empirical evidence that tax arbitrage or loss optimization is a central motivator of resolution strategy. Tax benefits may not always be the decisive factor in working towards profitability; in many cases, there is need for operational restructuring, debt realignment or stabilization of the workforce.
Moreover, the interpretation is further placed on Insolvency Professionals, who may not be tax experts. With no standardized disclosure formats, the risks of subjective and inconsistent reporting become significant, which goes exactly against the purpose of transparency. In particular, it is problematic in the context of cross-borders insolvencies, where foreign applicants already have to navigate strange legal ground after which such disclosures can be seen as ambiguous or misleading. The amendment captures a typical compliance dilemma, where strengthened information does not necessarily lead to more effective decision making and only with structured, contextualized, and intelligible information.
Conclusion
In summary, there’s a lack of real space to unpack the inappropriateness of certain aspects of IBBI’s 2025 reforms is difficult: the reform questions it poses of the evolving structure and normative priorities of India’s insolvency regime are complex. The amendments to Information Utilities Regulations seem to ensure an increase in procedural integrity, yet they can be burdensome to smaller stakeholders through their hyper-formalistic compliance and basis of debtor cooperation in adversarial contexts. At the same time, requiring tax loss disclosures in Information Memorandums is meant to increase financial transparency, but may overestimate the practical utility of this disclosure in determining resolution outcomes. These reforms reflect the tension between regulatory idealism and a reality of imperfect operational practices—more data or formality does not give rise to a system in which providing more data does not produce more timely or equitable insolvency resolutions. Calibration to these measures is also critical, as otherwise, they run the risk of increasing delays and alienating stakeholder, which run contrary to the core goals of the IBC. But for the regime to be illuminating, not entangled, reform needs to respond to ground realities, be adaptive across context, and be consistent with the overreach aim of an efficient, fair, and economically sustainable corporate recovery.
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