India’s Insolvency and Bankruptcy Framework

 

1. The Insolvency and Bankruptcy Code (IBC), 2016 established a unified, creditor-driven, and time-bound framework for resolving insolvency in India.

2. Before IBC, insolvency cases were handled under multiple laws such as the Companies Act, SICA, SARFAESI, and debt recovery mechanisms, leading to fragmented proceedings.

3. The Corporate Insolvency Resolution Process (CIRP) under IBC was designed to be completed within 180 days, extendable up to a maximum of 330 days.

4. The Committee of Creditors (CoC), comprising financial creditors, plays the central decision-making role during insolvency resolution.

5. The Insolvency and Bankruptcy Board of India (IBBI) functions as the regulatory authority overseeing insolvency professionals and related institutions.

6. Corporate insolvency cases under IBC are adjudicated by the National Company Law Tribunal (NCLT), while appeals are heard by the NCLAT.

7. Till March 2026, a total of 8,987 Corporate Insolvency Resolution Processes (CIRPs) had been admitted under the IBC framework.

8. As of March 2026, 1,419 corporate debtors had been successfully resolved through approved resolution plans.

9. Creditors realised approximately ₹4.32 lakh crore through approved resolution plans under the IBC till March 2026.

10. According to RBI data for 2024–25, IBC contributed ₹54,528 crore of recoveries, accounting for 52.4% of total recoveries made by Scheduled Commercial Banks.

11. The 2019 amendment to the IBC introduced an overall maximum timeline of 330 days for completion of insolvency resolution proceedings.

12. The 2021 amendment introduced the Pre-Packaged Insolvency Resolution Process (PPIRP) specifically for MSMEs.

13. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 mandates that insolvency admission applications should normally be decided within 14 days.

14. The 2026 amendment expands the role of the Committee of Creditors by allowing it to supervise liquidation proceedings and replace liquidators when necessary.

15. The 2026 amendment introduces a new creditor-initiated insolvency resolution mechanism for specified categories of corporate debtors, subject to defined safeguards and approval thresholds.

Must Know Terms :

 

1.InsolvencyAndBankruptcyCode

The Insolvency and Bankruptcy Code (IBC), 2016 is India’s principal insolvency law that consolidated multiple insolvency and debt recovery laws into a single framework. It introduced a creditor-driven and time-bound resolution mechanism for companies, partnerships, and individuals. The Code focuses on value maximisation, revival of viable businesses, improved credit discipline, and balanced treatment of all stakeholders during financial distress.

2. CorporateInsolvencyResolutionProcess

CorporateInsolvencyResolutionProcess (CIRP) is the core insolvency mechanism under the IBC for resolving corporate financial distress. Once admitted by the NCLT, an Insolvency Professional manages the company while the Committee of Creditors evaluates resolution plans. CIRP is designed to be completed within 180 days, extendable up to 330 days, ensuring timely resolution and preventing erosion of enterprise value.

3. CommitteeOfCreditors

CommitteeOfCreditors (CoC) is the primary decision-making body during insolvency resolution under the IBC. It consists mainly of financial creditors and is responsible for approving resolution plans, appointing insolvency professionals, and making key commercial decisions. The IBC Amendment Act, 2026 further strengthens the CoC by extending its oversight role into liquidation proceedings and allowing replacement of liquidators when required.

4.InsolvencyAndBankruptcyBoardOfIndia

The Insolvency and Bankruptcy Board of India (IBBI) is the statutory regulator established under the IBC. It regulates Insolvency Professionals, Insolvency Professional Agencies, and Information Utilities while framing regulations for the insolvency ecosystem. The IBBI ensures transparency, accountability, and uniform standards in insolvency proceedings, thereby supporting efficient implementation of the insolvency resolution framework across India.

5. PrePackagedInsolvencyResolutionProcess

PrePackagedInsolvencyResolutionProcess (PPIRP) was introduced through the IBC Amendment Act, 2021 for Micro, Small and Medium Enterprises (MSMEs). It allows a debtor and creditors to negotiate a resolution plan before formal insolvency proceedings begin. This debtor-in-possession model reduces delays, preserves business continuity, lowers litigation costs, and provides a faster alternative to the conventional CIRP framework.

6. InsolvencyAndBankruptcyCodeAmendmentAct2026

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 seeks to improve efficiency, transparency, and predictability in insolvency resolution. It introduces clearer definitions, faster admission timelines, expanded creditor oversight, structured liquidation procedures, safeguards for approved resolution plans, and a new creditor-initiated insolvency process. The amendment aims to reduce delays, strengthen recoveries, and enhance the effectiveness of India’s insolvency framework.

India’s insolvency framework has undergone a major transformation through the Insolvency and Bankruptcy Code, 2016 (IBC). It introduced a unified, creditor-driven and time-bound mechanism for resolving financial distress. Over the years, the Code has strengthened recovery mechanisms and improved resolution outcomes, with creditors realising nearly ₹4.32 lakh crore through approved resolution plans till March 2026. Building on this experience, the Insolvency and Bankruptcy Code (Amendment) Act, 2026 introduces several reforms to reduce delays, strengthen creditor oversight and improve procedural clarity. The amendment seeks to make the insolvency resolution and liquidation process more efficient, predictable and resolution-oriented.

 

MCQ :

 

1. The Insolvency and Bankruptcy Code (IBC) was enacted in:

A) 2014
B) 2015
C) 2016
D) 2017

2. Before the IBC, which of the following laws dealt with insolvency-related matters in India?

A) SICA
B) SARFAESI
C) Companies Act provisions
D) All of the above

3. The Corporate Insolvency Resolution Process (CIRP) is designed to be completed within:

A) 90 days
B) 120 days
C) 180 days
D) 365 days

4. Under the IBC framework, the maximum overall timeline for completion of CIRP is:

A) 270 days
B) 300 days
C) 330 days
D) 365 days

5. The Committee of Creditors (CoC) primarily consists of:

A) Operational creditors
B) Financial creditors
C) Employees
D) Shareholders

6. Which institution regulates Insolvency Professionals and Insolvency Professional Agencies in India?

A) RBI
B) SEBI
C) NCLT
D) IBBI

7. Corporate insolvency cases under the IBC are adjudicated by:

A) Supreme Court
B) NCLAT
C) NCLT
D) DRT

8. Appeals against NCLT decisions under the IBC are heard by:

A) High Court
B) NCLAT
C) RBI
D) IBBI

9. Till March 2026, how many CIRPs had been admitted under the IBC?

A) 7,419
B) 8,987
C) 9,421
D) 10,254

10. Creditors realised approximately how much through approved resolution plans till March 2026?

A) ₹2.32 lakh crore
B) ₹3.54 lakh crore
C) ₹4.32 lakh crore
D) ₹5.28 lakh crore

11. According to RBI data for 2024–25, IBC accounted for what percentage of total SCB recoveries?

A) 42.4%
B) 48.6%
C) 52.4%
D) 58.2%

12. Which amendment introduced the Pre-Packaged Insolvency Resolution Process (PPIRP) for MSMEs?

A) 2018 Amendment
B) 2019 Amendment
C) 2020 Amendment
D) 2021 Amendment

13. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 generally requires insolvency admission applications to be decided within:

A) 7 days
B) 14 days
C) 21 days
D) 30 days

14. Under the IBC Amendment Act, 2026, the Committee of Creditors can:

A) Supervise liquidation proceedings
B) Replace the liquidator
C) Continue oversight after resolution failure
D) All of the above

15. The new creditor-initiated insolvency resolution mechanism was introduced through:

A) IBC Amendment Act, 2019
B) IBC Amendment Act, 2020
C) IBC Amendment Act, 2021
D) IBC Amendment Act, 2026