One of the central features of the amendment is the introduction of a mandatory 14-day timeline for admitting insolvency applications once a default has been established
Nirmala Sitharaman. Pic/PTI
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 IANS.
The legislation introduces key changes to streamline the process and reduce delays, particularly those arising from prolonged litigation.
14-day timeline introduced for insolvency admission
One of the central features of the amendment is the introduction of a mandatory 14-day 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 IANS.
The move is seen as a significant step toward addressing long-standing concerns about delays that have hindered timely resolution under the Insolvency and Bankruptcy Code (IBC).
Government proposes 12 amendments to strengthen framework
Presenting 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 IANS.
She 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 hold-ups, reported IANS.
The Bill had earlier been introduced for discussion on March 27 and was subsequently referred to a Select Committee for detailed examination before being passed.
IBC’s role in improving banking sector health
During 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 IANS.
According to the finance minister, companies undergoing insolvency resolution have shown improvements in governance practices and financial stability after emerging from the process, reported IANS.
She 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 run.
Not a debt recovery tool, but a resolution framework
Clarifying 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 IANS.
“The IBC is a framework for rescuing viable enterprises and ensuring timely resolution of stressed assets,” she said, underlining the importance of balancing creditor interests with business continuity, reported IANS.
Focus on faster resolution and economic stability
The passage of the amendment Bill signals the government’s continued focus on strengthening India’s 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 stability.
With these changes, the IBC is expected to become more efficient and responsive, further reinforcing its role as a key pillar of India’s financial and corporate governance architecture.
(With inputs from IANS)
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