This article is written by Saniya Ansari, a Second-Year B.A. LL.B. student at Lloyd Law College, Greater Noida.

Abstract

The insolvency and bankruptcy code, 2016 is that specific area of corporate law which covers the ambit of consolidated framework that governs insolvency and bankruptcy cases and proceedings of companies, businesses, enterprises, firms working in partnerships as well as individually. In contemporary times, the progressive economies, businesses and enterprises are more prone to face financial distress for which an enhanced and well-structured framework is necessary in order to attain transparency, speedy transactions and value-maximization.

As The Insolvency and Bankruptcy Code, 2016 completes ten years successfully; this article thoroughly talks about the evolution of IBC over the last ten years and examines the objectives, features, recent amendments and institutional framework of the IBC. It also sheds light on Corporate Insolvency Resolution Process, role of Committee of creditors and adjudicating authorities.

Keywords

Insolvency, bankruptcy, corporate law, creditors, liquidation, stakeholders, national company law tribunal, IBC.

Introduction

The Insolvency and bankruptcy code, 2016 marked a significant and dynamic shift by accumulating all the fragmented and scattered insolvency and bankruptcy laws under one umbrella code, known as The Insolvency and Bankruptcy code, 2016. The overarching purpose behind the framework was to ensure that the competing interests of various stakeholders are balanced and maximize recoveries in order to complete the process of corporate insolvency and resolution in a timely manner. A fair, time-bound, and open process is what it aims to achieve for all stakeholders. IBC, 2016 introduced a time-bound resolution process which contributed to solving corporate insolvency cases in a fixed timeline. This law added value to creditors in comparison to debtors and established Insolvency and Bankruptcy Board of India (IBBI). IBC not only helps banks reduce bad loans but also creates a culture of debt repayment and maintains liquidity.

Though IBC comes with all its benefits, it has its own flaws and challenges. Likely:

• Delays in legal procedures and court proceedings.
• Excessive workload on the judicial system.
• Slow speed of resolution process.

Background and History

The insolvency and bankruptcy code, 2016 previously relied on laws like the Sick Industrial Companies Act (SICA), 1985, and the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993. These laws struggled with prolonged delays, low recovery rates, and inadequate mechanisms for corporate revival which resulted in worsening the NPA crisis in the banking sector. On 22^nd August, the finance ministry formed the Bankruptcy Legislative Reforms Committee (BLRC), which was headed by T.K. Vishwanathan. The principal goal of this formation was to draft a new bankruptcy law for India. The committee submitted its report and the draft in November 2015. Following the public feedback and suggestions, the revised version of the draft was introduced by the then finance minister, Arun Jaitley as the Insolvency and Bankruptcy code, 2015.

This bill was presented in December 2015 for a detailed review by the Parliamentary Committee. The Joint Parliamentary Committee submitted its report in April 2016 in which an updated version of the draft was included. Subsequently, the Lok Sabha, on 5^th May 2016 and the Rajya Sabha, on 11^th May 2016, passed the bill. Eventually, the then President Pranab Mukherjee gave his assent to the bill on 28^th May 2016, and it got officially notified in the Gazette of India.

Key objectives

• Time-bound resolution of insolvency: one of the most important purposes of IBC code is to resolve insolvency cases within a fixed timeline, i.e. 180 days which can be extended to 90 days. Time-bound resolution of insolvency helps reduce value destruction and ensures creditor confidence.
• Safeguarding the rights of the creditors: It plays a major role in securing the rights of financial and operational creditors and establishes a creditor-driven process.
• Recovery of financially distressed enterprises: the code helps the financially troubled companies in smooth and quick recovery and promotes resolution over liquidation.
• Advancement of entrepreneurship: the IBC code encourages entrepreneurship and supports new startups with reduced fear of failure.
• Emerging role in cross-border insolvency: the long-term objectives of IBC code include resolving cross-border insolvency matters which eventually contributes to India’s global trade investment infrastructure.

Core Attributes and Legislative Framework

The IBC consists of a two-stage process. The CIRP aims to resolve viable businesses and liquidation for unviable ones. Key-features include:

• Adjudicating Authority: National Company Law Tribunal (NCLT) for corporate insolvency.
• Insolvency Professionals (IPs): Appointed to manage CIRP and liquidation.
• Committee of Creditors (CoC): Empowered to make commercial decisions.
• Timeline: CIRP to be completed within 180 days (extendable to 90 days).
• Moratorium: Prevents legal action against the debtor during CIRP. The IBBI regulates IPs, insolvency agencies and information utilities, to ensure operational efficiency.

Pre-Amendment IBC Provisions

Preceding the 2026 amendments, IBC used to mainly work through the Corporate Insolvency Resolution Process (CIRP). It was a time-bound process and the purpose of it was to resolve the insolvency of the financially challenged companies. Through this mechanism, the company management could be brought under supervision, moratorium could be imposed, and protection could be provided to the company’s assets. Along with this, by coordinating with the interest of the creditors, attempts were made to find resolutions for the company. If somehow, the resolution faces problems or not possible, the company had to suffer with the process of liquidation. CIRP could also be initiated by the financial creditors, operational creditors, and corporate debtors themselves. IBC made remarkable achievements in strengthening the rights of the creditors, improved the recovery rates of the banks, and reduced the influence of promoters in financially struggling companies. Consequently, this framework faced some limitations and hurdles, the most prevalent are postponements in insolvency applications, completion of regulation process taking longer time than expected, excessive backlog of court cases and complex legal procedures. Following all these issues, the asset values of the companies came to a decreasing halt and severely impacted the confidence of the investors.

Post-Amendment IBC, 2026

The amendments in the IBC code alter the framework of insolvency law at its roots, keeping its major focus in ensuring pace and efficiency.

Creditor-driven insolvency mechanism: if the financial creditors hold at least 51% of the voting share, they can simply begin the insolvency process outside the National Company Law Tribunal (NCLT). By doing so, the process will be more creditor-driven over a court-driven model.

Streamlining NCLT’s intervention: To initiate the insolvency cases, the NCLT’s approval is not needed as it earlier used to be. The National Company Law Tribunal’s role will only be limited to guidance, supervision, and dispute resolution. This will result in a reduced judicial backlog.

Secure timelines: The Tribunal is bound to give approval or rejection within a span of 30 days. If anyhow, the delay surpasses 14 days; a well-informed reason is required. The liquidation process should not exceed the period of 180 days. The main motive is to make the process fast and efficient.

Preference for revival: instead of shutting down the company, emphasis will be made upon its revival and restructuring. This will amount to secured jobs, protection of the value of shareholders and continuation of business.

Empowering creditors and IBBI: empowering the Committee of creditors (CoCs) and Insolvency and Bankruptcy Board of India to ensure accountability and reduce arbitrariness by governing their actions and fixing the time bars.

Cross-border insolvency: in cases where the company operates businesses in various countries, a better framework would be in place to handle its insolvency cases across borders which will eventually increase the confidence of foreign investors.

Prevention of Exploitation: strict rules will come into picture in order to ensure that the promoters and the company management could not be able to misuse it in any manner. This will improve the legitimacy of the process.

Juxtaposing Pre and Post Amendment IBC

Prior to the amendment, the process of insolvency in the IBC framework would require direct involvement of NCLT. Conversely, after the 2026 amendment, creditors in certain circumstances could start the initial process without NCLT involvement. Thus, the central and procedural powers of NCLT have shifted from an adjudicatory role to a supervisory role. Earlier, the timelines in the insolvency cases used to get extended and due to this reason, there would be delays in the whole resolution process. Following the amendment, the timelines have been made stricter and more enforceable, facilitating no further delays. The focus of post-amendment has been on revival rather than liquidation, enhanced powers of creditors while addressing the issue of huge backlog through structural changes. The Insolvency and Bankruptcy Code, 2026 has attempted to include cross-border insolvency provisions for the purpose to align Indian insolvency framework with the international standards to get in tune with the global practices to make our country an investor-friendly destination for foreign investors.

Landmark Supreme Court Judgements (2026)

Telecom Spectrum Community Resource, IBC Can’t Determine Its Ownership & Control: Supreme Court.

The Supreme Court held that the ownership and control of telecom spectrum cannot be determined by the Insolvency and Bankruptcy Code (IBC), since it is a common good.

A bench of Justice PS Narasimha and Justice Atul Chandurkar held that the spectrum is a material resource of the community in the Constitutional sense. Hence, the spectrum must benefit the common good, so its control must be secured for the citizens.

In State Bank of India v Union of India and Ors. The Supreme Court held that “We must understand the spectrum as a material resource of the community precisely as what our Constitution refers as the material resource of the community. If that be so, it is easy to find the path by simply following the State policy to ensure that spectrum and its benefits subserve the common good and not the uncommon good. But for this purpose, its ownership and more importantly its control, with all its attributes, including benefits, have to be secured for the citizens. Our judgment, therefore, is in three parts. In the first part we define the legal implications of spectrum. In the second part, we identify the true legal province. In the third part, we examine treatment of asset under IBC, and in this context, its application to telecommunication laws that govern ownership of spectrum.”

Criticisms of the Amendment

The IBC Amendment 2026 was necessary and is a transformative and progressive reform that addressed all the structured gaps existing in the code, prior to the amendment. Despite that, it has several objections. For instance:

• The recovery rights of the creditors temporarily got restricted.
• Companies which are genuinely distressed would not be able to benefit from voluntary insolvency resolution.
• Greater importance given to debtor protection led to a negative impact on creditor confidence.
• Disputes arose regarding default date and interpretation of protection period.
• The phrase “no application shall ever be filled” granted permanent immunity to the defaults of a protected period.

Conclusion

The Insolvency and Bankruptcy Code (Amendment) 2026 is a landmark legislation that plays an important role in signifying a culmination in the evolution of insolvency laws and regulation in India. The multi-dimensional IBC Amendment is designed to solve the age-old disputes between the creditors and the debtors in an efficient manner. It also ensures reduced pending cases in the courtrooms and plug the loopholes in the existing laws while ensuring that the code emerges as a robust, efficient and globally competitive legislation.

The IBC alters the overall lending-borrowing culture, at the same time, encourages timely admission of insolvency applications. This amendment is not merely a reform, but a much-needed restructuring of the IBC’s governance by focusing on the reality of implementation while striving for the necessary structure. This amendment looks forward to achieving speed, transparency, efficiency, and completion of insolvency and bankruptcy related cases in a time-bound manner in order to attain a successful governance and a thriving economy.