Insolvency and Bankruptcy Code Updates 2026

Introduction

The Insolvency and Bankruptcy Code (IBC), 2016 has dramatically reshaped India’s financial resolution landscape strengthening creditor rights, improving debt recovery mechanisms, and providing a structured framework for insolvency resolution. As we enter 2026, pivotal IBC updates, regulatory reforms, amendments, circulars, and judicial pronouncements are reshaping insolvency practice and policy in India.

This comprehensive guide covers the latest insolvency law developments in India, including new IBBI regulations, Amendment Bills, tribunal decisions, statistical trends, and practical takeaways for lawyers, insolvency professionals (IPs/RPs), corporates, and creditors.

Insolvency and Bankruptcy Code Updates 2026

1. Recent Regulatory Updates Under IBC

1.1 New IBBI Regulations for Liquidation & CIRP (2026)

In early January 2026, the Insolvency and Bankruptcy Board of India (IBBI) issued updated regulations governing the Liquidation Process and CIRP (Corporate Insolvency Resolution Process). These include:

• Revised forms and procedures for liquidation;

• Procedural streamlining to improve clarity and execution during the winding-up process;

• Amendments impacting the interaction between liquidators and stakeholders under insolvency proceedings.

Impact: These reforms aim at reducing procedural bottlenecks that historically slowed liquidation and resolution processes.

1.2 Enhanced Transparency: Mandatory Disclosure of Avoidance Transactions

The IBBI has strengthened transparency by mandating that avoidance transactions, fraudulent transactions, and wrongful trading instances be fully disclosed in the Information Memorandum provided to resolution applicants.

Previously, ambiguous disclosures could enable hidden deals in resolution plans, compromising creditor outcomes. This rule ensures that potential bidders and stakeholders understand any legacy preferential transactions before submitting offers.

1.3 Detailed Disclosure of Carry Forward Losses

A new circular requires that carry forward losses under the Income Tax Act be clearly detailed in the Information Memorandum during CIRP - including quantum, categories, and utilization time frames.

Why it Matters: Greater financial transparency assists resolution professionals and bidders in formulating realistic and financially viable plans.

1.4 Grievance Handling Amendments (2025)

IBBI has modified the grievance and complaint handling procedure, making the clock start only after all legal proceedings conclude ensuring complaints aren’t prematurely dismissed before judicial outcomes.

2. Judicial Developments Influencing Insolvency Practice

2.1 Supreme Court: Insolvency Tribunals Can’t Decide Disputed Ownership Claims

In a landmark ruling, the Supreme Court of India held that National Company Law Tribunals (NCLTs) lack jurisdiction to decide disputed ownership titles (e.g., trademark or IP ownership) during an insolvency proceeding redirecting such issues to civil/commercial courts.

Implication: This decision curtails overreach by insolvency authorities and protects intellectual property rights by requiring separate litigation for ownership disputes.

2.2 Noteworthy Enforcement Action in the IBC Context

The Enforcement Directorate (ED) recently arrested the promoter of Richa Industries Ltd for alleged asset diversion during insolvency proceedings, underscoring enforcement risk and fraud scrutiny during corporate bankruptcies.

3. Legislative Updates: IBC Amendment Bill (2025–26)

3.1 IBC (Amendment) Bill, 2025 - Major Proposals

The Government introduced a comprehensive IBC Amendment Bill aimed at strengthening the insolvency ecosystem. Key highlights include:

• A Creditor-initiated Insolvency Resolution Process as an alternative framework to traditional CIRP;

• Clarification that claims by central and state authorities will be treated as secured only with contractual backing — removing automatic priority;

• Group and cross-border insolvency provisions to handle multi-jurisdictional corporate distress.

Expected Impact: These amendments aim to reduce delays, broaden creditor rights, and modernize insolvency law to global standards.

3.2 Reducing Dependency on CCI Approval for Insolvency Bids (Discussion)

Industry experts have advocated for scrapping the requirement of prior Competition Commission of India (CCI) approval for insolvency bids, which currently slows down resolution processes.

If implemented, this change could eliminate uncertainty during the bidding phase, accelerating approvals and recovery.

4. Insolvency Case Trends & Data

4.1 Case Filings & Resolution Plans

Recent data shows that over 40,000 insolvency cases were filed in NCLTs under IBC through September 2024, indicating robust enforcement of the Code.

4.2 Resolution Outcomes & Debt Recovery

A significant body of debt has been resolved under the IBC framework:

• Over ₹26 lakh crore of debt has been resolved directly or indirectly through resolution and pre-admission settlements since the inception of IBC.

4.3 Pre-Admission Settlements & Efficiency Improvements

Statistics reveal that nearly 60% of resolution plans approved in the last three years culminated in formal settlements, showing increased efficiency of the resolution mechanism.

5. Voluntary Liquidation Trend: Rising Corporate Choice

Promoters increasingly prefer voluntary liquidation as a route to wind up unviable businesses. This strategy simplifies exit, reduces compliance burdens, and provides a structured closure for solvent entities.

6. Practical Implications for Stakeholders

6.1 For Insolvency Professionals & Law Firms

• Enhanced reporting requirements demand deeper due diligence.

• Disclosure obligations will influence resolution strategy and offer formulation.

6.2 For Creditors & Financial Institutions

• Streamlined case trends and improved data transparency reduce uncertainty.

• New amendment proposals may increase creditor control and quicker recovery timelines.

6.3 For Corporate Debtors

• Clarity in the regulatory framework encourages compliance.

• Judicial interpretations restrict overreach by tribunals, protecting core rights.

7. Conclusion

The Insolvency and Bankruptcy Code is rapidly evolving, propelled by regulatory amendments, judicial clarity, and legislative reforms. The IBC ecosystem is now more transparent, data-driven, and better aligned with global insolvency standards. For law practitioners, IPs, financiers and corporates, staying updated on IBC amendments, tribunal outcomes, and regulatory trends is essential for navigating insolvency proceedings effectively.

By integrating these updates into legal practice and business risk assessment frameworks, stakeholders can make informed decisions, protect their economic interests, and contribute to a more robust insolvency regime.

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FAQ (Short Two-Line Answers)

Q1: What is the latest amendment regarding disclosure in IBC resolution plans?

IBBI now mandates full disclosure of avoidance transactions and carry forward losses in the Information Memorandum, enhancing transparency.

Q2: Can NCLTs decide disputed ownership issues during a corporate insolvency?

No, the Supreme Court ruled that disputed ownership (such as trademarks) must be adjudicated in civil/commercial courts, not by insolvency tribunals.

Q3: What key changes are proposed in the IBC Amendment Bill, 2025?

The Bill introduces a creditor-initiated process, clarifies secured claims treatment, and includes group/cross-border insolvency frameworks.