New Bankruptcy Bill Aims to Expedite Asset Recovery for Companies

New Delhi, April 1: The Insolvency and Bankruptcy Code (IBC) (Amendment) Bill, 2025, is set to establish a faster, creditor-centric approach to help both companies and banks quickly recover value from distressed assets. This information was shared by experts on Wednesday.

The discussion on the IBC (Amendment) Bill took place today in the Rajya Sabha, presented by Minister of State for Corporate Affairs Harsh Malhotra. The bill has already received approval from the Lok Sabha.

The legislation mandates a 14-day timeframe for accepting bankruptcy applications once a company’s default is established.

Finance Minister Nirmala Sitharaman indicated that the bill proposes 12 amendments aimed at strengthening the resolution framework.

Advocate Varun Singh, founder and managing partner of Foresight Law Office India, stated that the IBC (Amendment) Bill allows courts to initiate bankruptcy proceedings solely on the basis of default, with financial records held by banks considered as evidence.

He further explained that this provision aims to eliminate delays or litigation that may arise before a company applies for bankruptcy. Additionally, it will enhance certainty in the bankruptcy process and reduce procedural hurdles, enabling timely recovery of loans for creditors.

According to Singh, the bill includes provisions for creditors in the banking sector to initiate bankruptcy proceedings (after approval from 51% of financial creditors). This allows for intervention before the value of a company’s assets declines.

During the bill’s approval in the Lok Sabha, Finance Minister Nirmala Sitharaman noted that the IBC, implemented in 2016, has been a key factor in improving the state of the Indian banking sector. This framework has also assisted companies in achieving better credit ratings over time.

She emphasized that the law aims to resolve distressed assets, not merely recover outstanding amounts.

Sitharaman clarified, “The IBC is a framework to address financial distress while preserving the value of viable businesses. It was never intended to be a tool for debt recovery.”