Parliament Fast-Tracks Insolvency Law Amendments

The Indian Parliament on Wednesday advanced the process of resolving distressed companies by passing amendments to the Insolvency and Bankruptcy Code (IBC). These amendments, approved by the Rajya Sabha, aim to expedite case resolution and address the backlog of cases, with a focus on ensuring companies' survival rather than liquidation.

Finance Minister Nirmala Sitharaman clarified that the IBC is not a debt recovery tool. Rather, it is a market-driven process to preserve enterprise value while addressing financial distress. Since 2016, IBC has resolved 1,376 companies, recovering significant sums for financial creditors, and has contributed to the improvement of banking sector health.

The amendments intend to streamline adjudication processes, strengthen liquidation oversight, and align domestic practices with international standards. Special provisions have been made for micro, small, and medium enterprises (MSMEs) to ensure their participation in the resolution process, thereby preventing loss of business owners’ control during insolvency.