The amendments to the IBBI (Liquidation Process) Regulations reflect a strong push toward transparency, speed, and value maximization. While the intent is progressive, the practical execution of these changes has created new challenges for liquidators on the ground. As professionals leading complex insolvency estates, we now navigate a regulatory ecosystem that is more demanding, time-bound, and digitally intensive than ever before.
Based on real-world experience, here are the key challenges that liquidators are currently facing, along with insights that the insolvency ecosystem must acknowledge as we move into 2026.
1. The 60-Day Deadline for SCC Formation — Easier on Paper, Tougher in Practice
The amendments require forming the Stakeholders’ Consultation Committee (SCC) within 60 days. However, the practical bottlenecks remain:
- Verification of claims itself often extends beyond the theoretical timeline, especially in large corporate debtors with incomplete records.
- Many stakeholders do not respond promptly, delaying the constitution of SCC.
- Identifying the right representatives becomes tricky when creditors have sub-groups or multiple assignees.
This creates pressure on liquidators to meet timelines without compromising due diligence.
2. Push for Going Concern Sale — But Ground Realities Resist
The regulator clearly prefers going concern sales, with amendments strengthening the expectation that liquidators attempt this route first.
But practically:
- Many businesses entering liquidation are already non-operational for years.
- Key employees have exited; licenses and contracts have lapsed.
- Machinery is outdated or non-functional, making it unattractive for bidders.
- Restarting operations just to attempt a going-concern sale often escalates costs without commensurate value.
The intention is noble — the practicality is not always aligned.
3. Higher Reporting, More Disclosures — But Limited Resources
Recent changes demand:
- detailed asset memoranda,
- regular progress updates,
- enhanced sale reports, and
- digital filings on multiple platforms.
However, in liquidation:
- record-keeping is often poor,
- the corporate debtor may not have functioning staff,
- data may be missing, lost, or in incompatible formats.
This places the entire burden on the liquidator to reconstruct information — often from scratch — within tight statutory timelines.
4. Increased Scrutiny on Valuation — With Rising Expectations
Regulations have tightened the standards for valuers, and SCCs demand robust justification of liquidation values. But challenges remain:
- Valuers often struggle due to lack of access to premises, incomplete asset registers, or missing technical documents.
- Assets in liquidation deteriorate rapidly — rusting machinery, encroached land, missing stock.
- Revaluation demands from stakeholders can cause delays and disputes.
Liquidators are expected to balance transparency with practicality — a task easier said than done.
5. Multiple Auctions, Same Result — Bidder Fatigue Is Real
IBBI’s emphasis is on:
- fair auction processes,
- maximized competitive bidding,
- and reduced negotiation-based sales.
However, we now see:
- repeated auction failures,
- limited bidder interest in stressed assets,
- rising administrative costs, and
- pressure from SCC to reduce reserve prices.
Bidder fatigue often sets in after two or three rounds, especially when assets are specialized or litigation heavy.
6. Avoidance Transactions — Long Timelines vs. Limited Liquidation Period
Avoidance applications (preferential, undervalued, fraudulent transactions) are increasingly complex and time-consuming.
But the liquidation clock keeps ticking.
Liquidators face:
- long pendency of avoidance matters,
- difficulty in accessing old financial data,
- costs of litigation, and
- the challenge of distributing proceeds when significant value lies locked in avoidance recoveries.
The mismatch between procedural timelines and judicial realities remains unresolved.
7. Compliance Burden vs. Fee Structure — An Unbalanced Equation
Liquidation involves:
- asset protection,
- legal representation,
- stakeholder communication,
- regulatory filings,
- auctions, valuations, and litigation.
Yet the fee mechanisms (often dependent on realization and distribution) do not always reflect the effort required to do this, especially in no-asset or litigation-heavy cases. This creates an imbalance between expectations and actual operating challenges.
The Way Forward — A Balanced Approach
The amendments undoubtedly strengthen India’s insolvency framework, but the ecosystem must adopt a practical mindset. Liquidation cases vary drastically in size, complexity, and record availability.
To truly maximize value, we may need:
- flexibility in timelines based on merits,
- digital records handover from day one of CIRP,
- greater support for avoidance litigation,
- empowerment of liquidators in asset monetization, and
- streamlined reporting frameworks.
Liquidation is not merely a statutory procedure — it is a delicate balance of law, finance, asset management, and stakeholder expectations.
As practitioners, we stand at the intersection of all these forces, striving to deliver value within a rapidly evolving regulatory environment.
Conclusion
The recent IBBI amendments aim for transparency, accountability, and efficiency — goals that every insolvency professional fully supports.
However, to make liquidation truly effective, the system must align regulatory ambition with ground realities.
As the insolvency landscape deepens in India, pragmatism, technological integration, and stakeholder cooperation will be the key drivers of a successful liquidation regime.
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I am Insolvency Resolution Professional handled/ handling many insolvency cases. In case of any queries related to IBC, you may contact me at Krit Narayan Mishra, kritmassociates@gmail.com | Mob: 9910859116
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