Lok Sabha passes Insolvency and Bankruptcy Code (Amendment) Bill 2025

The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, incorporating recommendations of the Select Committee and proposing 12 changes aimed at strengthening the insolvency resolution framework.

Introducing the Bill, Finance Minister Nirmala Sitharaman said the amendments seek to address practical challenges and align the Insolvency and Bankruptcy Code (IBC), 2016, with evolving global practices. She noted that the revisions also draw upon the experience gained since the law’s implementation, as well as judicial interpretations by courts and tribunals.

The Minister stated that the objective is to maximise value for stakeholders while improving governance in the resolution process. She said the IBC has played a key role in sustaining stressed companies by enabling value realisation while keeping them as going concerns.

Highlighting its impact on the banking sector, Sitharaman said the Code has contributed to improving financial health by facilitating the resolution of stressed assets. She informed the House that banks have recovered ₹1,04,099 crore through various channels, with the IBC accounting for ₹54,528 crore, or 52.3 per cent of total recoveries.

The Bill proposes to replace the existing fast-track insolvency process with a creditor-initiated framework tailored for small companies, featuring shorter timelines. It also introduces provisions for out-of-court settlements and adopts a debtor-in-possession model, under which management remains with the existing board, subject to safeguards and defined timelines.

Further, the amendments include provisions for group insolvency and cross-border insolvency, aimed at enhancing investor confidence and streamlining complex cases involving multiple entities across jurisdictions.

Sitharaman said the Select Committee, which conducted extensive consultations, submitted its report in December 2025 with 11 recommendations, all of which have been accepted by the government. An additional provision has been included, requiring the Committee of Creditors to record reasons for its decisions, a step expected to improve transparency in the resolution process.

-ANI