Major Reforms under the Insolvency and Bankruptcy Code (Amendment) Act, 2026

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 received the President’s assent on 6th April 2026 and will be brought into force on dates to be notified by the Central Government. This amendment introduces far‑reaching changes to the corporate insolvency resolution process, liquidation, and creditor rights, further refining the Code based on seven years of practical experience.

Key amendments at a glance:

• Registered Valuer definition (Section 3): A new clause aligns the definition of a registered valuer with the Companies Act, 2013, ensuring consistency in valuation standards.
• Security interest clarity: An explanation now clarifies that a security interest arises only through an agreement between parties – not merely by operation of law.
• Avoidance transactions (Section 26): Filing of applications for avoidance or fraudulent trading no longer halts the CIRP or liquidation; such proceedings can continue even after the process concludes.
• Transfer of guarantor assets (New Section 28A): A creditor who has taken possession of a guarantor’s asset can, with CoC approval, permit its transfer as part of the resolution plan – subject to specific voting thresholds and conditions when the guarantor is also in distress.
• Resolution plan safeguards (Section 30):
  • Payment to dissenting financial creditors must now be explicitly provided for, at least equal to the liquidation value.
  • The resolution plan must detail a supervisory mechanism for implementation, potentially involving a committee of the resolution professional, creditors, and the applicant.
  • The CoC is required to record reasons for its approval of a plan.
• Adjudicating Authority’s enhanced role (Section 31):
  • A phased approval mechanism allows the NCLT to first sanction plan implementation and then approve the distribution methodology within 30 days.
  • Defects in a plan can now be rectified before rejection.
  • A strict 30‑day timeline for passing orders on plans (with reasons for delay).
  • Licences, permits, and similar rights attached to an approved plan are protected from suspension or termination; pre‑approval claims against the corporate debtor are extinguished.
• Liquidation reforms (Section 33):
  • Before a liquidation order is passed, the CoC (with 66% vote) may apply to restore the CIRP – but only once and with a 120‑day deadline.
  • The CoC can now decide to dissolve the corporate debtor instead of going through full liquidation.
  • The Adjudicating Authority must pass a liquidation order within 30 days.
• Liquidator replacement (Sections 34 & 34A): Provisions have been introduced to enable the committee of creditors to replace the liquidator.

These amendments reflect a continued effort to balance speed, creditor control, and fairness in insolvency resolution. Practitioners handling NCLT matters should carefully review the final notified provisions once they are brought into force.

For a comprehensive, section‑by‑section commentary on the IBC and its evolving jurisprudence, see our book “Law on Insolvency & Bankruptcy” – authored by a former NCLT Registrar with hands‑on experience in CIRP and liquidation proceedings.

(Note: This summary is based on the official Act as published in the Gazette of India. Always refer to the full text for legal interpretation.)