The Centre on Tuesday tabled the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 in the Lok Sabha. The objective of the bill is to insert certain new provisions for effective implementation of the code.
The 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,” as per the statement of objects and reasons of the bill.
The bill introduces the concept of creditor-initiated insolvency resolution with an out-of-court initiation mechanism for genuine business failures to facilitate a faster and more cost-effective process. The bill also introduces provisions for group insolvency and 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,” according to the statement of objects and reasons of the bill.
The bill also introduces a penalty for initiating frivolous or vexatious proceedings before the adjudicating authority to deter persons from initiating such proceedings and delay the insolvency resolution and liquidation processes.
In another proposed amendment, the bill also includes liquidator and IRP assignments alongside RPs within the 10-assignment limit, as this will help ensure a more equitable distribution of work.
Ashutosh Narang, partner, CMS INDUSLAW, said that for fairness across the ecosystem, similar safeguards should also be considered for IPEs, such as capping the number of assignments routed through them to avoid concentration of cases in a few entities.
Clause 22 of the Code of Conduct (First Schedule to IP Regulations) limits an IP to 10 assignments as a RPs in CIRP, with a sub-limit of three cases having claims above Rs 1,000 crore. This cap was not applicable to other roles like IRP, RP to PG and liquidator.