IBC Amendment 2026 Gets Presidential Assent, Introduces Creditor-Led Insolvency

One of the additions is the insertion of Chapter IV-A, introducing a creditor-initiated insolvency resolution process (CIIRP). Under Sections 58A and 58B, specified financial creditors holding at least 51% in value can initiate insolvency after giving a 30 days notice to the corporate debtor.

The process is designed to be time-bound, to be completed within 150 days (extendable by 45 days), offering a faster alternative to the earlier CIRP framework.

Another major change is the enhanced role of the Committee of Creditors (CoC) in liquidation. The CoC will now supervise liquidation and may replace the liquidator under Section 34A. This is a departure from the earlier framework where its role largely ceased post-CIRP. Liquidation timelines have also been rationalized to 180 days (extendable by 90 days).

The amendment also seeks to strengthen timelines across the Code. Sections 7, 9, and 10 now require admission decisions within 14 days, with reasons to be recorded for delay, while approval or rejection of resolution plans under Section 31 must be completed within 30 days.

Earlier, admission of a CIRP petition within 14 days was directory in nature.

Additionally, the amendment clarifies that avoidance proceedings (fraudulent, preferential, undervalued transactions) can continue even after completion of CIRP or liquidation, ensuring accountability. It also introduces a framework allowing transfer of guarantor assets during CIRP (Section 28A) with CoC approval and mandates fair distribution to dissenting financial creditors in line with liquidation value principles.

The 2026 amendment tries to introduce novel reforms with the aim of streamlining the resolution process to make it efficient and faster for resolution of debt-ridden companies.