From Withdrawal to Creditor Control: Key Shifts under the IBC Amendment Act, 2026

On 6 April 2026, the Insolvency and Bankruptcy Code (Amendment) Act, 2026 received Presidential assent, with the objective of strengthening the credibility, speed, and predictability of the insolvency framework, while carefully balancing the interests of creditors, corporate debtors, and other stakeholders.

Key Highlights:

1. This Act primarily amends the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).

2. Section 3 of the IBC is revised to strengthen the institutional framework of insolvency professionals:

   • Insertion of Section 3(27A) introduces the definition of “registered valuer” by adopting the meaning assigned under Chapter XVII of the Companies Act, 2013, ensuring uniform valuation standards.

   • Insertion of Section 3(31A) defines “service provider”, covering insolvency professionals, insolvency professional agencies, information utilities, registered valuers and other notified persons registered with the Insolvency and Bankruptcy Board of India (IBBI).

   • An Explanation to Section 3(31) clarifies that a security interest must arise from an agreement or arrangement between parties and cannot exist merely by operation of law.

3. The definition provisions under Section 5 (Part II of the Code) are also revised:

   • Insertion of Section 5(2A) defines “avoidance transaction” with reference to Sections 43, 45, 49 and 50 of the Code.

   • Insertion of Section 5(9A) defines “fraudulent or wrongful trading” by linking it directly to Section 66.

   • A proviso to Section 5(11) clarifies that where multiple corporate insolvency resolution process (CIRP) applications are pending, the insolvency commencement date shall be the date of the first application filed.

   • The Explanation to Section 5(26) is broadened to expressly allow sale of one or more assets through one or more resolution plans.

   • Section 5(28) is amended to clarify that voting share refers only to financial creditors who are eligible to vote in the committee of creditors

4. The proviso to Section 7(4) has been omitted, and Section 7(5) is substituted to mandatorily require the Adjudicating Authority to admit or reject an application within fourteen days, with a statutory obligation to record reasons for any delay.

5. Section 9 is modified by shifting regulatory control to IBBI regulations in Section 9(3)(e). Further, a new proviso to Section 9(5) requires the Adjudicating Authority to record reasons where an order is not passed within fourteen days.

6. The scope of information required in applications is expanded under Section 10(3), and the restriction relating to pendency of disciplinary proceedings against the proposed insolvency professional is removed. Section 10(4) now requires recording of reasons where orders are not passed within fourteen days, aligning corporate-debtor-initiated CIRP with creditor-initiated proceedings.

7. Section 11 is amended to include proceedings under the newly inserted Chapter IVA, thereby preventing misuse or overlapping of insolvency mechanisms by the same corporate debtor.

8. Section 12A is substituted to regulate withdrawal of admitted insolvency applications. Withdrawal is permitted only after constitution of the committee of creditors and before issuance of the first invitation for resolution plans, subject to approval of 90% of the voting share of the committee of creditors (CoC).

9. An Explanation is inserted to Section 14(3)(b), clarifying that the moratorium applies even when a surety attempts to initiate or continue proceedings against the corporate debtor pursuant to a contract of guarantee.

10. Section 16(2) is amended to mandate that, in Section 7 applications, the insolvency professional proposed by the financial creditor must be appointed as interim resolution professional if no disciplinary proceedings are pending.

11. For applications under Section 10, Section 16(3A) requires the Adjudicating Authority to seek a recommendation from the IBBI, thus, ensuring regulatory oversight.

12. Sections 18 and 19 are amended to strengthen professional responsibility and cooperation:

    • Section 18(b) clarifies that the Interim Resolution Professional (IRP) is required not only to collate claims but also to verify and determine their value.

    • Section 19 expands the duty of cooperation to all persons associated with the corporate debtor and clarifies that it applies equally to IRPs and the Resolution Professional (RP).

13. Section 21(11) is inserted, requiring the committee of creditors to supervise liquidation proceedings under Chapter III, including ongoing liquidations where dissolution has not commenced.

14. Section 22(3)(a) is amended to provide that a resolution professional is deemed appointed from the date of the committee of creditors’ resolution, and this decision must be communicated to the insolvency professional, the corporate debtor, and the IBBI.

15. A new Section 28A is inserted allowing transfer of assets of personal or corporate guarantors during CIRP with specified CoC approval thresholds and regulating the utilisation of sale proceeds.

16. Liquidation provisions under Sections 34, 34A, 52 and 53 are restructured:

    • The same professional cannot perform both RP and liquidator roles.

    • The CoC is empowered to replace the liquidator.

    • Distribution priorities and secured creditor rights are clarified.

    • Sections 38 to 42 are omitted.

17. Avoidance and misconduct provisions under Sections 43, 46, 47, 49 and 50 are strengthened by redefining look-back periods and allowing creditors to initiate proceedings where the insolvency professional fails to act.

18. Section 54 and provisions relating to voluntary liquidation are amended to prescribe strict timelines for liquidation and permit termination of voluntary liquidation mid-way subject to specified conditions.

19. A new Chapter IV-A (Sections 58A—58K) is introduced relating to the Creditor-Initiated Insolvency Resolution Process, allowing notified financial creditors to initiate insolvency with debtor-in-possession management, fixed timelines, conversion and withdrawal mechanisms.

20. A new Chapter VA (Section 59A) is also inserted that lays the foundation for group insolvency, empowering the Central Government to formulate rules for coordinated insolvency proceedings of corporate groups.

21. Section 61 is amended by insertion of sub-section (6), which mandates that the National Company Law Appellate Tribunal (NCLAT) dispose of appeals within three months from the date of receipt.

22. Penalty and enforcement provisions are reinforced through insertion of Sections 64A, 67B, 67C and 183A, addressing frivolous or vexatious proceedings, moratorium violations, suppression of material facts, and non-compliance with resolution plans.

23. Sections 240B and 240C introduce institutional reforms aimed at modernising the insolvency framework, by providing for an electronic insolvency portal and enabling a statutory framework for cross-border insolvency recognition, coordination and cooperation.

24. A new Section 242(1A) empowers the Central Government, for a period of five years, to issue corrective orders to address implementation difficulties arising from the 2026 amendments.

25. The amendments reinforce the IBC’s core objectives of time-bound resolution, creditor empowerment, regulatory oversight and modernised insolvency administration.

[Insolvency and Bankruptcy Code (Amendment) Act, 2026, published on 6-4-2026]