India’s Insolvency Framework Overhaul 2025

Major Overhaul Planned in India’s Insolvency Framework

Why in the News ?

The IBC (Amendments) Bill, 2025 is undergoing review by a Lok Sabha committee and proposes major reforms, including faster insolvency admission, group insolvency, cross-border frameworks, and a creditor-led out-of-court process to accelerate corporate resolution.

Key Reforms Proposed Under IBC (Amendment) Bill 2025:

• The draft Bill proposes a creditor-led, largely out-of-court insolvency process aimed at faster corporate turnaround and reducing tribunal workload.
• It introduces faster NCLT admission timelines, addressing long delays that slow resolution under the current framework.
• Reforms include a new structure for group insolvency and cross-border bankruptcy, enabling coordinated resolution of related entities.
• The Bill suggests clearer provisions for resolving implementation disputes, an area that often delays time-bound resolution.
• These proposals stem from the Supreme Court’s September 12 order in Mansi Brar Fernandes vs Shubha Sharma, directing the government and IBBI to evolve improved mechanisms.

Policy Deliberations and Government Consultations

• Two committees—one appointed by the government, the other by IBBI—are finalising the proposals before the next amendment round.
• The Lok Sabha select committee, headed by BJP MP Baijayant Panda, is currently examining the Bill.
• Despite being listed in the Winter Session agenda, the committee may take more time, with chances of the Bill reaching Parliament this session being “fifty-fifty”.
• Consultations with real estate regulators are scheduled for December 5, especially for provisions linked to homebuyers and stalled projects.
• Reforms being considered separately include project-specific insolvency, stronger homebuyer safeguards, enabling the SWAMIH fund to complete stalled projects under IBC, and early project registration with urban authorities.