On 26-5-2025, the Insolvency and Bankruptcy Board of India (‘IBBI’) notified Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (4th Amendment) Regulations, 2025 to enhance transparency, improve creditor protections, and streamline insolvency resolution. It came into force on 26-5-2025.
Key Points:
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The notable changes that this Amendment brings to Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, includes a progressive step towards an efficient insolvency system, reinforcing India’s commitment to creditor rights and corporate restructuring.
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This Amendment allows interim finance providers to attend committee of creditors meetings as ‘observers’. This is expected to enhance better decision making, though without giving these entities any kind of voting rights.
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With prior approval from the committee, Resolution professionals will now be able to expand restructuring possibilities, encompassing the corporate debtor as a whole, specific asset sales, or a combination of both while providing solutions for financial distressed entities.
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The Amendment introduces crucial provisions for creditors:
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Those who voted against resolution plan, will receive pro rata payments;
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Those who voted in favour of resolution plan, will receive payments as per the agreed structure.
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Resolution professionals can explicitly report non-compliant resolution plans, ensuring adherence to regulatory norms and discouraging procedural irregularities.
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This Amendment aligns India’s insolvency framework with global best practices, strengthening investor confidence and financial stability.
