Finance and Corporate Affairs Minister Nirmala Sitharaman introduced the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, in the Lok Sabha, a pivotal step toward reforming India’s insolvency framework. The bill, referred to a select committee following Sitharaman’s request, introduces an out-of-court mechanism for creditor-initiated insolvency resolution to address genuine business failures. Aimed at reducing delays and enhancing governance, the proposed changes seek to maximize stakeholder value while minimizing business disruptions.

The bill proposes a group insolvency framework to streamline resolutions for complex corporate structures, ensuring coordinated decision-making to prevent value destruction. Additionally, a cross-border insolvency framework aligns domestic practices with international standards, fostering investor confidence and facilitating recognition of Indian insolvency proceedings abroad. Sitharaman emphasized that these reforms will ease judicial burdens, promote ease of doing business, and improve access to credit, building on extensive stakeholder consultations initiated with a 2023 discussion paper.

Since its enactment in 2016, the Insolvency and Bankruptcy Code has undergone six amendments, with the latest in 2021, to ensure time-bound resolution of stressed assets. The 2025 bill marks a significant evolution, introducing mechanisms to expedite resolutions while aligning with global best practices. By addressing inefficiencies and enhancing coordination, the proposed amendments position India’s insolvency framework to support a more robust economic ecosystem.

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