The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, bringing in a creditor-initiated insolvency resolution process and tightening timelines for admission and disposal of cases under the Code.
According to Finance Minister Niramala Sitharaman, the bill seeks to replace the pre-packaged insolvency regime with a more efficient one. "The earlier framework was not fully utilised. It is now being replaced by a new creditor-initiated insolvency framework featuring out-of-court settlements, debtor-in-possession, and creditor-in-control models,", she said.
As per an earlier draft of the bill, a new chapter was proposed to allow notified classes of financial creditors to set the process in motion without waiting for prior admission by the Adjudicating Authority.
The draft was subsequently referred to a Select Committee, which suggested, among other changes, lowering the voting threshold for initiating this process from 66% to 51% to ease decision-making.
While the official final text of the bill as passed is awaited, some of these recommendations are cleared by the House.