New Delhi [India], April 14 : In its decade-long journey, the IBC has seen six amendments with the aim to achieve time-bound recoveries and maximisation of the value of the assets. The latest amendments approved by the Parliament introduce various new frameworks while strengthening the current frameworks. Given the slowdown in recovery rates in 9M FY2026, ICRA believes the amendments are aimed to boost recoveries for lenders in a shorter timeframe.
ICRA noted that the proposed amendments aim to "reduce delays, maximise value for all stakeholders, and improve governance" while introducing new provisions that follow global best practices for resolving stressed assets.
According to an ICRA report, the legislative update addresses the backdrop of "protracted delays in legal proceedings and an excessive litigation burden that continues to strain the National Company Law Tribunal (NCLT)."
These changes focus on streamlining the admission process and reducing the significant haircuts previously seen by creditors.
A primary shift in the framework involves the removal of discretionary power from the NCLT during the admission of insolvency applications. The new rules specify that if a default exists and the application is complete, the tribunal must admit the case.
With the new amendment, now "The NCLT will not have any discretionary power while admitting or rejecting an application u/s 7 of the IBC despite the existence of a default as was done in the past for a few cases." ICRA expects this will expedite the admission of cases in the NCLT.
The amendment also establishes a strict 14-day timeline for the NCLT to approve or reject an admission. To further eliminate ambiguity, Information Utilities (IU) records now function as the primary proof of default.
Governance within the Committee of Creditors (CoC) also sees a significant change, as financial debt owed to related parties of the corporate debtor is no longer included when determining voting shares.
"Related financial creditors will not have a voting share in the CoC, which is a positive and boosts the representation of other financial creditors in the CoC," the report noted.
The report further highlighted the introduction of a penalty regime, where the NCLT imposes fines between Rs 1 lakh and Rs 2 crore on individuals who initiate frivolous or vexatious proceedings.
Additionally, the new Creditor-initiated Insolvency Resolution Process (CIIRP) replaces the old fast-track route, offering a 150-day timeline for resolution.
For cases entering liquidation, the CoC now takes on a supervisory role, shifting away from the previous consultative model to ensure a creditor-driven process.
"This would avoid repetition of common activities, ensure faster completion of the liquidation process, ensure smoother claim handling of liquidation, avoid disputes at the later stage of liquidation and harmonise the powers and duties of the liquidator during the liquidation process with those during the CIRP," the ICRA explained.
The legislation also introduces enablers for group and cross-border insolvency, allowing the Central Government to frame rules that align domestic recovery with international best practices.
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