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Lok Sabha Passes IBC Amendment Bill to Speed Up Insolvency Resolution

The Lok Sabha has approved the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, aimed at accelerating the resolution process for stressed companies. A key provision mandates a strict 14-day timeline for admitting insolvency applications after a default is established. Finance Minister Nirmala Sitharaman emphasized that the IBC's core objective is to rescue viable businesses, not merely act as a debt recovery mechanism. The amendments, which include penalties to deter abusive litigation, seek to address the primary cause of resolution delays.

Key Points: Lok Sabha Approves IBC Amendment Bill to Fast-Track Cases

  • Mandatory 14-day timeline for case admission
  • Aims to reduce litigation delays
  • Introduces penalties for process abuse
  • Strengthens corporate rescue framework
2 min read

Lok Sabha approves Insolvency and Bankruptcy Code (Amendment) Bill

Lok Sabha passes IBC amendment bill to impose 14-day admission timeline and penalties to reduce delays in corporate insolvency resolution.

"IBC was never intended to be a debt recovery tool. - Finance Minister Nirmala Sitharaman"

New Delhi, March 30

The Lok Sabha on Monday approved the Insolvency and Bankruptcy Code Bill, aimed at speeding up insolvency proceedings to resolve cases related to defaulting companies.

The Bill introduces a mandatory 14-day timeline for admitting insolvency applications once a company's default has been established.

Finance Minister Nirmala Sitharaman said that the government has proposed a set of 12 amendments to the Insolvency and Bankruptcy Code to further strengthen the resolution ecosystem.

Sitharman said the primary reason for IBC resolution delays is extensive litigation, and the IBC Bill proposes penalties to prevent abuse of process.

The Lok Sabha took up the Bill moved by Finance Minister Nirmala Sitharaman for discussion on March 27. The Bill, which was initially referred to a Select Committee, has been introduced to address the delays in resolving cases related to the insolvency and bankruptcy of a company or individual.

FM Sitharaman said in the Lower House that the Insolvency and Bankruptcy Code (IBC) has played a key role in improving the health of the banking sector, while underlining that the law was never intended to function as a debt recovery mechanism.

Speaking in the Lok Sabha while piloting the Bill, the finance minister said the IBC has contributed to better credit discipline and improved the credit profile of companies.

The minister said companies have been doing well and their corporate governance practices have also improved after coming out of the insolvency resolution process.

She made the remarks while replying to the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, as reported by the Select Committee. "The Insolvency and Bankruptcy Code, which came into force in 2016, has been a main factor in improving the overall health of the Indian banking sector," Sitharaman said, adding that the framework has also helped companies achieve better credit ratings over time.

At the same time, she said the objective of the law is the resolution of stressed assets and not merely the recovery of dues. "IBC is a framework for rescuing viable businesses and resolving financial stress while preserving the enterprise value. IBC was never intended to be a debt recovery tool," she explained.

- IANS

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Reader Comments

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Priya S
Good to see the focus is on resolution and saving businesses, not just recovery. So many jobs depend on these stressed companies. If implemented well, this can protect livelihoods. 👍
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Arjun K
The penalties to prevent abuse are crucial. Some promoters were using endless litigation to delay the process. Time to hold them accountable. Strong move by the government.
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Sarah B
As someone who follows corporate law, I appreciate the intent. However, a 14-day deadline seems extremely ambitious. Without a significant increase in judicial resources and infrastructure at NCLT, this could lead to rushed decisions or backlogs elsewhere. Hope the implementation is carefully planned.
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Karthik V
IBC has definitely improved credit discipline. Earlier, wilful default was a big problem. Now companies know there's a time-bound process. This amendment should make it even more effective. Jai Hind!
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Nisha Z
My husband's factory was stuck in insolvency for 2 years. The uncertainty was terrible for all workers. If this bill cuts down that time, it's a blessing for thousands of families. 🙏

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