Lok Sabha passes Insolvency and Bankruptcy Code (Amendment) Bill
Sitharaman noted that the bill replaces the underutilized fast-track process, which is essentially a CIRP with a shortened timeline for small companies.
“The previous framework was not fully utilized. It is now being replaced by a new creditor-initiated bankruptcy framework that includes out-of-court settlements, debtor-in-possession and creditor-in-control models,” he said.
The finance minister informed the Lok Sabha that the Insolvency and Bankruptcy Code (IBC) has facilitated the resolution of 1,376 companies and enabled creditors to recover Rs 4.11 lakh crore by December 2025.
Regarding the proposed amendments, he said that the IBC Amendment Bill provides for compulsory acceptance of bankruptcy petition within 14 days after the default of the company occurs.
Highlights of Sitharaman’s response to the debate on the IBC Bill:
- Proposed amendments to IBC provide enabling provisions for group, cross-border insolvency processes
- Insolvency and Bankruptcy Code led to better credit scores of companies
- IBC was never intended to be a debt recovery tool
- Bill proposes penalties to prevent abuse of process
- Extensive litigation is the main reason for IBC resolution delays
- The IBC Amendment Bill provides for compulsory acceptance of bankruptcy petition within 14 days of the company’s default
- The interests of workers are not compromised under the IBC process; Workers’ dues are given priority
- Bankruptcy law is a key factor in improving the health of the country’s banking sector
