Finance Minister Nirmala Sitharaman moves Bill to amend IBC, speed up resolution

New Delhi: Finance and corporate affairs minister Nirmala Sitharaman on Wednesday moved a bill in the Lok Sabha to amend the Insolvency and Bankruptcy Code, proposing a creditor-initiated framework with largely out-of-court arrangements to speed up bankruptcy resolution.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, also proposes frameworks for faster resolution of cross-border and corporate group insolvency cases.Sitharaman moved the bill, as “reported by” the select House committee that vetted it, for the Lok Sabha’s consideration.

The amendments, the first since 2021 and the seventh since the law’s inception in 2016, introduce new concepts and streamline existing processes to reduce delays in resolving insolvent companies that erode asset value, experts said.

Between April and December 2025, the average resolution time rose to 764 days, excluding periods exempted by the National Company Law Tribunal, compared with 597 days as of March 2025. The IBC currently stipulates a 330-day deadline, including litigation time, for resolution. The proposed creditor-led resolution process will have a 150-day deadline. It allows a majority of unrelated financial creditors and the debtor to reach an informal agreement on a rescue plan, limiting the NCLT’s role to affirming the moratorium and approving the plan, experts said. Unlike the current system, the corporate debtor will continue to manage the company under the supervision of a resolution professional. Lenders will have the option to choose between the new framework and the existing corporate insolvency resolution process.

“The amendments mark the transition of the IBC to a new phase-from mistrust to trust, from regime punishing lack of governance to a regime motivating governance and from an adversarial approach to a conciliatory one based on coordination for insolvency resolution,” said Anoop Rawat, national practice head (insolvency and restructuring practice) at Shardul Amarchand Mangaldas.The bill proposes a framework, aligned with a model UN law, to enable creditors to handle cases where a bankrupt company has assets or creditors overseas, and to seek cooperation from other jurisdictions.