How India's Insolvency Code Resolves Company Debt, and What the 2026 Amendment Changes

When a company cannot pay its debts, India's Insolvency and Bankruptcy Code, 2016 moves the dispute into a tribunal-supervised process with fixed deadlines. Parliament passed the Code in May 2016, and it was notified in The Gazette of India on 28 May 2016 after presidential assent, according to Wikipedia's account of its history. The application goes to the National Company Law Tribunal (NCLT), and a resolution professional runs the process.

The Code was amended in 2026. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 adds a route that notified financial institutions can start for eligible debtors and changes several steps of the existing process. The sections below cover the standard route, the 2026 changes and the figures reported so far.

How a Case Enters the Tribunal

Applications to start the process come under sections 7, 9 and 10 of the Code. Financial creditors file under section 7, operational creditors under section 9, and the corporate debtor itself under section 10, according to Wikipedia.

Once insolvency commencement is declared, a moratorium applies. Litigation and asset transfers are stopped, and the board of directors is suspended, Wikipedia says.

The Code gives the tribunal a maximum of 14 days to consider applications under those three sections, according to Wikipedia. The 2026 Act requires it to record reasons in writing where orders admitting or rejecting them are not passed within 14 days, according to Conventus Law.

Bar & Bench reports that the Act removes the discretion previously read into section 7 and requires admission where a debt and a default are established and no disciplinary proceedings are pending against the proposed interim resolution professional. It also gives an applicant 7 days to cure defects before an application is rejected.

The 180-Day Clock and Its Exits

The standard process runs on a 180-day clock, with one extension of up to 90 days. A 330-day limit added in 2019 is discussed below. Section 12(1) requires the process to be completed within 180 days from the date of admission.

The extension is available only if a committee of creditors resolution passed by 66% of the voting shares instructs the resolution professional to seek it. The tribunal may then extend the process by up to 90 days, according to IBC Law, which describes it as a single extension.

Withdrawal of an application is also restricted. Conventus Law says it may be permitted only after approval by 90% of the voting shares of the committee of creditors, and that withdrawal is prohibited before the committee is constituted and after the first invitation for resolution plans is issued. Bar & Bench says withdrawal under Section 12A can occur only after the committee is constituted and after that first invitation has been issued.

The 330-Day Ceiling and Its History

The Insolvency and Bankruptcy Code (Amendment) Act, 2019 added an outer limit of 330 days from the insolvency commencement date. That period includes any extension and the time spent in related legal proceedings. IBC Law says the change took effect on 16 August 2019.

IBC Law also reports that the Supreme Court, in the Essar Steel India Ltd. case, struck down the word 'mandatorily' in that provision as arbitrary under Article 14 of the Constitution. Wikipedia describes the ruling as striking down the upper limit of 330 days, holding that the Adjudicating Authority and/or Appellate Tribunal may in some cases extend time beyond 330 days.

Earlier, the 2017 amendment barred certain parties from submitting resolution plans and buying defaulter assets during liquidation. Wikipedia names wilful defaulters and disqualified directors among them.

Against that ceiling, EY's report, citing IBBI, puts the average time to resolution approval at about 597 days, which it describes as well beyond the 330-day statutory limit.

What the Figures Show So Far

EY's report says 8,654 entities were admitted for the Corporate Insolvency Resolution Process (CIRP) and 6,761 had achieved closure. It counts about 1,300 resolution plans for admitted entities.

The same report says resolution plans delivered ₹12 lakh crore of debt resolution, and that creditor recovery delivered 171% of liquidation value. It also cites more than 30,000 cases resolved before admission, covering underlying defaults of ₹13.78 lakh crore.

Financial creditor-initiated cases show value realisation of about 188% of liquidation value, according to IBBI data and EY analysis, and larger cases (claim size of ₹5,000 crore-plus) take about 200 days longer than the average time to achieve CIRP closure.

The standard process runs on a 180-day clock, with one extension of up to 90 days.

The 2026 Amendment: Commencement, Liquidation and Regulators

IBC Law says the President gave assent on 6 April 2026, and the legislation is notified as Act No. 6 of 2026. Conventus Law says the Act was published in the Official Gazette after assent. Bar & Bench says the Act comes into force on notification by the Central Government, and IBC Law says it takes effect on a date the Central Government appoints by notification in the Official Gazette.

The Act changes liquidation too. Conventus Law says liquidators must complete asset sales and file for dissolution within 180 days of the liquidation commencement date, with up to 90 more days available. Bar & Bench says liquidation must be completed within 180 days, extendable by up to 90 days, with an overall outer limit of one year.

Conventus Law says the committee of creditors supervises liquidation and may replace liquidators by a 66% vote. Bar & Bench says the Stakeholders Consultation Committee oversees liquidation in a manner similar to its role during the CIRP.

The Insolvency and Bankruptcy Board of India (IBBI) notified multiple amendment regulations under the Act on 4 June 2026, according to its press releases. Its releases also list a syllabus for the Limited Insolvency Examination published on 1 July 2026 and effective from 1 October 2026, and a valuation examination syllabus published on 20 May 2026.

The Creditor-Initiated Route and Group Cases

The Act adds Chapter IV-A, sections 58A to 58K, for a creditor-initiated insolvency resolution process (CIIRP), according to IBC Law. Conventus Law says it lets notified financial institutions start insolvency for eligible debtors.

Bar & Bench says the initiating creditor may notify the debtor, subject to 51% approval within that class. The corporate debtor has 30 days to respond; if the creditor proceeds, it must obtain 51% approval again within a further 30 days. The process must be completed within 150 days, extendable by 45 days with NCLT approval.

Management remains with the board, but the resolution professional must attend board meetings and may intervene if board actions are inconsistent with the process, Bar & Bench says. Bar & Bench also says the NCLT may convert the CIIRP into a CIRP if a default occurred but the process was not correctly followed.

On group and cross-border cases, IBC Law says the amendment adds Chapter VA on group insolvency, and sections 240B (electronic portal) and 240C (cross-border insolvency). Conventus Law says section 240C empowers the Central Government to frame rules for cross-border insolvency proceedings involving notified classes of corporate debtors and notified jurisdictions, and contemplates recognition of foreign proceedings and judicial cooperation.