Centre introduces Bill to amend Insolvency & Bankruptcy Code

The Bill has added provisions for different frameworks for group insolvency and cross-border insolvency
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The government on Tuesday introduced amendments in the Insolvency and Bankruptcy Code focused around creditor-led resolution, cross-border insolvency and corporate group bankruptcy.

Finance Minister Nirmala Sitharaman moved the amendment Bill in the Lok Sabha, following which she urged the Chair to refer the Bill to the Select Committee. The Committee will give its report by the first day of the Winter Session of Parliament.

“The proposed amendments aim to reduce delays, maximise value for all stakeholders, and improve governance of all processes under the Code. They seek to modify existing provisions to better align with the overall objectives of the Code and to introduce new provisions that follow global best practices for resolving insolvency,” read the statement of objects and reasons related with the Bill.

Faster resolution

The Bill proposes introducing a ‘creditor-initiated insolvency resolution process’ with an out-of-court initiation mechanism for genuine business failures to facilitate faster and more cost-effective insolvency resolution, with minimal business disruption. Once implemented, ‘”this will help ease the burden on judicial systems, promote ease of doing business and improve access to credit,” stated the Bill while adding provisions for ‘group insolvency’ and ‘cross-border insolvency’. A new chapter has been added to facilitate the process.

Group insolvency

The group insolvency framework seeks to efficiently resolve insolvencies involving complex corporate group structures, minimising value destruction caused by fragmented proceedings and maximising value for creditors through coordinated decision-making. A new chapter has been added for conducting insolvency proceedings and liquidation proceedings where these proceedings are initiated against two or more corporate debtors that form part of a group.

It aims to establish a voluntary procedural coordination framework for group insolvency. This will, among other things, seek the appointment of a group coordinator to facilitate communication, information sharing, and alignment of proceedings. The coordination will be through an agreement among the participating corporate debtors and their committees of creditors. Additionally, a common bench may also be constituted for further procedural coordination, stated the proposed amendment.

Cross-border insolvency

The cross-border insolvency framework seeks to lay the foundation for protecting stakeholder interests in domestic and foreign proceedings, promoting investor confidence and aligning domestic practices with international best practices. “This will also pave the way for improved recognition of Indian insolvency proceedings in other jurisdictions,” added the Bill.

A new section will be inserted to empower the Central government to prescribe rules relating to cross-border insolvency proceedings. It also provides designating one or more Benches for dealing with proceedings under this section. Further, “before the rules framed under this section are issued, a draft of every rule proposed to be issued shall be laid down before each House of Parliament as per the procedure provided in this provision,” per the Bill.

Published on August 12, 2025