Centre backs most panel recommendations on IBC reforms, flags one concern
Subscribe to enjoy similar stories. NEW DELHI : The central government has accepted all recommendations, barring one, of a Parliamentary select committee of the Lok Sabha led by MP Baijayant Panda on proposed changes to India’s bankruptcy law, according to two people aware of the development.
This paves the way for the Insolvency and Bankruptcy Code (Amendments) Bill, 2025—which was introduced in Parliament in the monsoon session by finance and corporate affairs minister Nirmala Sitharaman—to be passed in the upcoming budget session of Parliament, starting 28 January, the people cited above said on condition of anonymity. The Centre has backed a wide-ranging set of reforms aimed at speeding up resolutions, reducing litigation, and improving outcomes for creditors—including changes to insolvency timelines, voting thresholds, liquidator appointments, and decriminalisation of certain offences.
What it has not endorsed is a clarification from the committee that granting a “clean slate" to new investors in corporate debt resolution plans—under proposed amendments to section 31 of the bankruptcy code—should apply retrospectively from the inception of the IBC in 2016. The government’s reasoning for opposing this recommendation is that several bankruptcy cases are currently before the courts, and applying the amendment retrospectively could have “unfathomable consequences" that cannot be anticipated at this stage, the first person cited above said.
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