A Comparative Critique Of 2025 IBC Amendment

The 2025 Amendment to the Insolvency and Bankruptcy Code introduces structural shifts that mirror international best practices. Whether India's ecosystem is ready to absorb them is the more urgent, and far less comfortable, question.

Nine Years On, A New Wager

The Insolvency and Bankruptcy Code (“the Code”) 2016 is often hailed as the most significant economic reform since the 1991 liberalisation. The pre-existing insolvency landscape was a creditor-hostile regime, scattered with numerous overlapping statutes. The Code brought about a unified, time-bound ecosystem, replacing the debtor with the creditor as the focal point, and established the National Company Law Tribunal, National Company Law Appellate Tribunal, and the Insolvency and Bankruptcy Board of India as integrated institutions.

A decade later, the picture is blurred. By June 2025, 8,492 CIRP cases had been admitted. Of the cases closed, 43% ended in liquidation, contrary to the Code's stated objective of resolution over liquidation. Average CIRP completion time stood at 602 days, against the statutory ceiling of 330 days, and recovery rates improved but hovered around 33% of admitted claims.^[1] The Code was working, but not as intended.

The IBC (Amendment) Act, 2026, passed by the Parliament on March 30, 2026, receiving Presidential assent on April 6, 2026, is an ambitious response to these structural flaws. Wholesale concepts such as the debtor-in-possession model, group insolvency frameworks, and expanded Committee of Creditors (“CoC”) have been imported from the global best practices. But are these the right reforms, and is India ready for them? This article comparatively examines these consequential provisions.

I. The Creditor-Initiated Insolvency Resolution Process

The CIIRP is unlike the existing CIRP. Introduced as Chapter IV-A, it enables specified financial creditors, as notified by the Central Government, to initiate insolvency proceedings against a corporate debtor without first approaching the NCLT. Upon the approval of 51% of the notified financial creditors by value of debt, the procedure commences out-of-court. Notably, the debtor remains in management, as opposed to the CIRP's creditor-control model. Only if no resolution plan is finalised within 150 days (extendable by 45 days), or if the debtor contests the initiation, does the NCLT enter the picture.^[2]

The US Chapter 11 and UK Administration

The CIIRP takes from Chapter 11 of the United States Bankruptcy Code, 1978. Chapter 11 has inspired debtor-in-possession (“DIP”) reorganisation models globally. Under DIP, the incumbent management continues to control the enterprise during the restructuring process, subject to creditor supervision, often maximising, or at least preserving, enterprise value.^[3] DIP financing, when structured with robust creditor protections, can enable rapid, value-preserving restructurings as seen in the case of General Motors (2009), American Airlines (2013), and Hertz (2020).

The UK's 'Administration' regime, under the Insolvency Act 1986 (as amended by the Enterprise Act 2002), and Ireland's Examinership process under the Companies Act 2014, offer a complementary model. Administration can be initiated by a qualifying floating charge holder without court intervention, placing control with a licensed administrator who operates as a court official with statutory duties.^[4] Similarly, Examinership, particularly after the Eircom (2012) and Quinn Insurance restructurings, permits the company to trade under court protection while a rescue scheme is formulated, underscoring that DIP works best when supported by robust financing ecosystems and predictable judicial intervention.^[5]

A debtor-in-possession model, if well-designed, addresses one of the IBC's most persistent criticisms, that CIRP triggers a sudden, often destructive shift of control that erodes enterprise value precisely when it needs to be preserved. Keeping incumbent management in place makes commercial sense. It may also reduce the catastrophic information asymmetry that resolution professionals face.

However, the American Chapter 11 model has been in operation for nearly five decades, undergirded by a sophisticated legal infrastructure, experienced bankruptcy judges, an active DIP lending market, institutional creditors familiar with the process, and a culture of debtor transparency. India's CIIRP, contrastingly, leaves critical questions unanswered.

First, allowing only the “specified financial creditors” to initiate the CIIRP creates a troubling hierarchy among creditors. Operational creditors, whose dues can represent existential claims for small suppliers and vendors, are entirely excluded. This amplifies, rather than resolves, the structural subordination of the operational creditor.

Second, the out-of-court initiation mechanism, while designed to reduce NCLT burden, risks becoming a tool of institutional coercion. Large banks and financial institutions have historically used insolvency mechanisms as de facto recovery tools rather than genuine rescue mechanisms. Finance Minister Nirmala Sitharaman's statement during the Lok Sabha debate, that “the IBC was never intended to be a debt-recovery tool”, is, ironically, most imperilled by this very provision.

Third, the absence of statutory DIP financing protections in the CIIRP framework is a critical lacuna. Section 364 of the US Bankruptcy Code gives DIP lenders super-priority status, facilitating interim credit for distressed enterprises. No equivalent provision exists in the CIIRP framework. Without access to interim finance on commercially viable terms, a debtor-in-possession is structurally disadvantaged like a manager without means.

The 150-day CIIRP window, extendable by 45 days, is also a gamble. American experience with pre-packaged Chapter 11 filings suggests that time-compressed restructurings can work, but only where the creditor-debtor negotiation is substantially complete before the formal process commences. India's credit culture is opaque, multi-layered, and adversarial, and thus ill-equipped for such pre-negotiated rescues.

The CIIRP is conceptually India's most audacious insolvency reform. In execution, it may be the most fragile.

II. The Cross-Border Insolvency Framework

The Amendment empowers the Central Government to frame rules for cross-border insolvency proceedings, covering recognition of foreign proceedings and judgments, and cross-jurisdictional protection of stakeholder interests. However, the operative text itself imports no UNCITRAL Model Law provisions, no automatic recognition mechanism, and no reciprocity regime.

The UNCITRAL Model Law and UK / US Practice

The UNCITRAL Model Law on Cross-Border Insolvency 1997 is the prominent international instrument, containing the model provisions for cross-border insolvency. It has been adopted by over 60 nations, including the United States (Chapter 15, added in 2005), the United Kingdom (Cross-Border Insolvency Regulations, 2006), Ireland, Singapore, Australia, and most recently, South Africa (2023). The Model provisions are primarily based on a cooperative logic, entailing a “main proceeding” in the jurisdiction where the debtor's “centre of main interests”, or COMI, is located, while “non-main proceedings” run in parallel elsewhere. It provides for automatic recognition, cooperation between courts, and the concept of modified universalism, that is, one insolvency proceeding, recognised and assisted globally.^[6]

British courts have emerged as a de facto international hub for cross-border insolvency. The English High Court's Insolvency and Companies List has handled landmark restructurings involving Indian assets, to the likes of the Vedanta Resources restructuring and the recognition disputes arising from the Videocon CIRP. In re Ocean Rig UDW Inc (2017), a Cayman Islands court similarly coordinated with US and English courts, through the Model Law framework, to successfully restructure a USD 3.7 billion debt pile within months.^[7]

India's absence from this global architecture has been conspicuous and costly. Indian insolvency proceedings have repeatedly been challenged or simply ignored abroad. Indian creditors have been unable to participate meaningfully in foreign proceedings, and foreign creditors have faced uncertainty about the recognition of their rights in Indian CIRPs. The IBBI's own data shows that several large insolvency cases have been complicated by the absence of any framework to coordinate with proceedings in Singapore, the US, and the UK.

The Amendment, thus, promises that even a rule-making framework signals legislative intent, and the COMI doctrine, once codified through rules, would allow Indian insolvency proceedings to claim primacy and seek recognition abroad. This is transformative for Indian creditors pursuing foreign assets of insolvent Indian companies.

The limitation is equally stark. Delegating the entire framework to subordinate legislation, with no guiding principles embedded in the parent statute, is excessive. The UK cross-border insolvency regime was implemented through a statutory instrument (the Cross-Border Insolvency Regulations 2006) that directly gave effect to the UNCITRAL Model Law's text with minimal modification.^[8] India's approach, by contrast, gives the executive a blank canvas, which, in the absence of political will or institutional capacity, may remain blank indefinitely.

There is also a deeper concern. The Model Law's success depends on judicial familiarity and confidence, qualities that require investment in specialist training, exposure to comparative jurisprudence, and the kind of commercial court infrastructure that England and Singapore have deliberately built.^[9] The NCLT, already with a backlog of over 1,900 ongoing cases, is under-equipped to function as a cross-border insolvency court without significant institutional reinforcement.

When Singapore adopted the UNCITRAL Model Law in 2017, it simultaneously invested in developing its judiciary and courts for restructuring matters, amending its Companies Act and enacting the Insolvency, Restructuring and Dissolution Act 2018, resulting in its rapid elevation as Asia's preeminent restructuring hub. India's amendment takes the legislative step but omits the institutional front, which is the more difficult, more expensive, and more consequential part.

III. The CoC's Extended Role in Liquidation

Perhaps the most structurally underappreciated amendment is the extension of the CoC's supervisory role into liquidation. The liquidator's quasi-judicial powers to admit or reject claims and determine their value, as under the previous Code, have been removed. Instead, the CoC has been empowered to appoint the liquidator and to replace him during the process, requiring 66% approval. The CoC's supervisory role has effectively supplanted the Stakeholder Consultation Committee (SCC), which already had limited advisory functions.

The Landscape in the UK and Australia

The UK's 1986 Insolvency Act gives creditor committees a significant oversight role, but the officeholder (administrator or liquidator) retains independent statutory duties and powers, which the Courts have vigorously protected. In Re Nortel Networks, the Supreme Court affirmed that officeholders are officers of the court with obligations that can override creditor instructions. This independence of the officeholder acts as the structural guarantee that balances creditor interests with those of other stakeholders, including employees, operational creditors, and the public.

Australia's regime under the Corporations Act 2001 also provides for creditor oversight through committees and approval mechanisms, while securing clear statutory independence for the liquidator, particularly for claim determination.

Prima facie, the amendment appears sound: the CoC, representing the financial creditors who bear the most risk in liquidation, has been granted greater visibility and control over the process. The existing SCC was often regarded as a toothless advisory body that could be and routinely was ignored.

However, the complete removal of the liquidator's claim-determination powers creates an accountability vacuum. The liquidator's quasi-judicial power to admit or reject claims provided a crucial check, ensuring claim determination was not simply a political exercise within the CoC. The Supreme Court in Swiss Ribbon Pvt. Ltd. v. Union of India ^[10] observed that “different considerations” govern the decision-making by the RP during CIRP and the liquidator during liquidation, justifying the different design of these roles. The Amendment collapses this distinction.

When claims are determined not by an independent officeholder but effectively by the CoC, the very body whose members are claimants, a structural conflict of interest is created. A secured financial creditor on the CoC has every incentive to maximise its own claim while minimising the claims of operational creditors and unsecured creditors who compete in the waterfall under Section 53. The removal of the liquidator's adjudicatory independence is, in effect, the removal of the last significant check on CoC power in the liquidation phase.

There is also a practical complication. The Amendment specifies that liquidation proceedings must be completed in 180 days, extendable by 90 days. But without a clear framework for the CoC-supervised claim determination process, or the procedural guarantees that the liquidator's quasi-judicial function previously provided, the compressed timeline may simply produce faster determinations that are more frequently challenged, piling litigation before the NCLT and undermining the very efficiency the amendment seeks to promote, as cautioned in Kalyani Transco v. Bhushan Power & Steel Ltd.^[11]

The 2025 Amendment represents genuine legislative courage and deserves credit for moving beyond incremental tinkering and attempting a structural transformation. But legislative courage without institutional patience produces half-built structures.

The comparative evidence from the US, UK, Ireland, Singapore, and Australia consistently suggests that the difference between a transformative insolvency reform and an expensive experiment is seldom in the text of the legislation. It is in the infrastructure, institutions, and implementation culture that surrounds it.

India's Pandora's box is now open. Whether what emerges is hope or something else entirely depends on the government's willingness to do the harder, quieter work that no legislative amendment can accomplish: building the institutional capacity to make the law mean what it says.

1. Insolvency and Bankruptcy News, April - June 2025, Insolvency and Bankruptcy Board of India, https://ibbi.gov.in/uploads/publication/3694d8874ee2ac5802de48d293ad5802.pdf. ↑

2. Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introduced in Lok Sabha on August 12, 2025; passed March 30, 2026. ↑

3. US Bankruptcy Code, 11 U.S.C. §§ 1101–1174 (Chapter 11); § 364 (DIP Financing). ↑

4. In re Nortel Networks Inc and Others, [2013] UKSC 52. ↑

5. Ireland Companies Act, 2014, Part 10 (Examinership); In re Eircom Ltd, [2012] IEHC 362. ↑

6. UNCITRAL Model Law on Cross-Border Insolvency, 1997, adopted by the UN General Assembly, A/RES/52/158. ↑

7. In re Ocean Rig UDW Inc, (2017) Cayman Islands Grand Court, unreported (COMI determination and cross-border coordination). ↑

8. UK Cross-Border Insolvency Regulations, 2006 (SI 2006/1030). ↑

9. UK Cross-Border Insolvency Regulations, 2006 (SI 2006/1030); Singapore Insolvency, Restructuring and Dissolution Act, 2018 (No. 40 of 2018). ↑

10. Swiss Ribbons Pvt. Ltd. v. Union of India, 2019 INSC 95. ↑

11. Kalyani Transco v. Bhushan Power & Steel Ltd., 2025 INSC 1165. ↑

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