Lok Sabha passes Insolvency and Bankruptcy Code Amendment Bill to speed up resolutions

The Lok Sabha on Monday approved the Insolvency and Bankruptcy Code Amendment Bill 2025 aimed at accelerating the resolution of stressed assets and improving efficiency in insolvency proceedings involving defaulting companies reported news agency IANSThe legislation introduces key changes to streamline the process and reduce delays particularly those arising from prolonged litigation14day timeline introduced for insolvency admissionOne of the central features of the amendment is the introduction of a mandatory 14day timeline for admitting insolvency applications once a default has been established This provision is expected to bring greater predictability and speed to the initial stages of insolvency proceedings reported IANSThe move is seen as a significant step toward addressing longstanding concerns about delays that have hindered timely resolution under the Insolvency and Bankruptcy Code IBCGovernment proposes 12 amendments to strengthen frameworkPresenting the Bill in the Lower House Nirmala Sitharaman stated that the government has proposed a total of 12 amendments to further strengthen the insolvency ecosystem reported IANSShe noted that excessive litigation has been one of the primary causes of delays in resolution processes To tackle this issue the amended Bill includes provisions for penalties aimed at discouraging misuse of the legal process and preventing unnecessary holdups reported IANSThe Bill had earlier been introduced for discussion on March 27 and was subsequently referred to a Select Committee for detailed examination before being passedIBCrsquos role in improving banking sector healthDuring the debate Sitharaman highlighted the positive impact of the IBC since its implementation in 2016 She said the framework has played a crucial role in improving the overall health of the banking sector and instilling greater credit discipline among borrowers reported IANSAccording to the finance minister companies undergoing insolvency resolution have shown improvements in governance practices and financial stability after emerging from the process reported IANSShe also noted that the Code has contributed to enhancing the credit profiles and ratings of companies over time making them more viable in the long runNot a debt recovery tool but a resolution frameworkClarifying the intent behind the law Sitharaman emphasised that the IBC was never designed to function as a debt recovery mechanism Instead its primary objective is to resolve financial stress while preserving the value of viable businesses reported IANSldquoThe IBC is a framework for rescuing viable enterprises and ensuring timely resolution of stressed assetsrdquo she said underlining the importance of balancing creditor interests with business continuity reported IANSFocus on faster resolution and economic stabilityThe passage of the amendment Bill signals the governmentrsquos continued focus on strengthening Indiarsquos insolvency framework and ensuring faster resolution of distressed assets By reducing procedural delays and curbing litigation the reforms aim to enhance investor confidence and support economic stabilityWith these changes the IBC is expected to become more efficient and responsive further reinforcing its role as a key pillar of Indiarsquos financial and corporate governance architectureWith inputs from IANS