Senior BJP leader Baijayant Panda has been appointed to head a 24-member Parliamentary committee that will vet proposed amendments to the insolvency law. Lok Sabha speaker Om Birla appointed the panel, which comprises members from various parties, including Supriya Sule, Karti Chidambaram, Shrikant Eknath Shinde, and Mahua Moitra. The committee will submit its recommendations to the government after comprehensive deliberations with various stakeholders. The government will then present the final amendments to the Insolvency and Bankruptcy Code (IBC) to Parliament for clearance, incorporating the panel's suggestions.

The IBC Amendment Bill, 2025, was introduced in the Lok Sabha in August by Finance and Corporate Affairs Minister Nirmala Sitharaman. The bill aims to expedite the resolution of stressed assets and strengthen the overall insolvency ecosystem. It proposes a framework for creditor-initiated resolution involving mostly out-of-court processes and frameworks for cross-border insolvency and corporate group bankruptcy. These are the first set of amendments to the IBC moved by the government since 2021.

Key Highlights of the Proposed Amendments:

• Creditor-Initiated Resolution: The bill introduces a framework for creditor-initiated resolution, primarily involving out-of-court processes. This aims to provide a faster and more efficient mechanism for resolving stressed assets, reducing the burden on the National Company Law Tribunal (NCLT).
• Cross-Border Insolvency: The amendments propose a framework for cross-border insolvency, which would enable the resolution of companies with assets and liabilities in multiple countries. This is a significant step towards aligning the IBC with international best practices.
• Corporate Group Insolvency: The bill also addresses the complexities of corporate group insolvency, providing a framework for resolving the financial distress of multiple companies within the same group. This will help in maximizing the value of assets and ensuring a coordinated resolution process.
• Government Dues: The amendment clarifies the priority of government dues, stating that they will not be treated as secured debt. Government dues pertaining to the 2 years preceding the liquidation commencement date, whether secured or unsecured falls under clause (e) and remaining amount beyond two years, if any to fall under clause (f). This resolves the dilemma created by the Rainbow Papers case.
• Mandatory Admission of CIRP: The amendment makes it mandatory for the Adjudicating Authority (AA) to admit a Corporate Insolvency Resolution Process (CIRP) application if a default has occurred, the application is complete, and there are no disciplinary proceedings against the Insolvency Professional (IP). Rejection is not possible on any other ground, and IU records will be conclusive evidence of default. This nullifies the Vidarbha judgment, which gave discretionary powers to the AA.
• Restricted Timeframe for Withdrawal Application: The bill restricts the timeframe for filing a withdrawal application under Section 12A.
• Penalty for Initiating Proceedings with Malice: The amendment introduces a penalty for initiating insolvency resolution or liquidation proceedings with the intention to defraud creditors or delay the process. This applies to both corporate persons and individuals/partnership firms.
• Reduced Timeline for Liquidation Process: The timeline for completing the liquidation process is reduced, mandating the liquidator to liquidate the assets and apply for dissolution within 180 days from the liquidation commencement date, with a possible extension of 90 days with sufficient reasons.
• Bankruptcy for Individuals: If no repayment plan is submitted within 21 days from the date of claim submission in personal insolvency cases, the AA will terminate the insolvency resolution process, and the debtor or creditors can file for bankruptcy.

The IBC, enacted in 2016, aimed to overhaul insolvency resolution by rescuing and reorganizing distressed companies through a time-bound process. While it has fostered accountability and credit discipline, its efficiency has been undermined by delays. The amendment bill proposes changes to improve efficiency and oversight in the liquidation process by authorizing the Committee of Creditors (CoC) to supervise liquidation and replace the liquidator with a 66% vote. It also extends the moratorium on assets to the liquidation process and allows the adjudicating authority to restore the CIRP once at the CoC's request.

The IBC Amendment Bill, 2025, aims to make the law more effective, efficient, and aligned with international best practices. By addressing key challenges and streamlining the insolvency resolution process, the amendments are expected to promote economic growth and financial stability.