Before 2016, a lender chasing a failed Indian company had a choice of slow roads: the Sick Industrial Companies Act and its board (BIFR), debt recovery tribunals, SARFAESI enforcement or company-court winding-up. Cases ran for six to eight years, and by the end there was usually little left to sell. The Insolvency and Bankruptcy Code, 2016 (IBC) replaced this with a single, time-bound process. A default triggers it. Control of the company passes from the promoter to a resolution professional, the committee of creditors (CoC) decides the company's fate, and if no buyer is found, the company is liquidated in a fixed order of priority. Ten years on, 9,166 companies have entered the process, creditors have recovered ₹4.35 lakh crore through resolution plans, and Parliament has passed the biggest overhaul of the Code so far, the IBC (Amendment) Act, 2026. This part explains the machinery, the numbers and the cases that shaped them.
Bad loans themselves (how they arise and how they are classified) are covered in Part 25; asset reconstruction companies and the NARCL "bad bank" are in Part 37. The IBC's place in the RBI's financial-stability toolkit, including the RBI's June 2017 list of 12 large defaulters and the 2019 Prudential Framework, is in Part 15. Remember one boundary throughout: the IBC does not apply to banks and insurers, which are resolved under their own laws (see Part 29).
In the news
- 1 October 2026: IBBI turns ten. Minister of State for Corporate Affairs Harsh Malhotra inaugurated the Insolvency and Bankruptcy Board of India's tenth Annual Day at Bharat Mandapam, New Delhi, and released the publication Shaping the Next Decade of IBC: The Road Ahead. Speakers noted that the Code has seen seven sets of amendments in ten years. Why it matters for the exam: the IBBI was set up on 1 October 2016; the CIRP provisions came into force on 1 December 2016.
- 30 June 2026: the ten-year scorecard. The IBBI's April–June 2026 newsletter reported 9,166 CIRPs admitted, 1,484 resolution plans approved and 3,074 liquidation orders. Creditors realised ₹4.35 lakh crore, which is 30.52% of their admitted claims but 94.72% of the fair value of the assets. Why it matters for the exam: the "about 31% of claims, about 95% of fair value" pair is the standard measure of IBC recoveries.
- 9 June 2026: non-bank creditors get observers. The IBBI's CIRP (Fourth Amendment) Regulations require the resolution professional to invite the five largest unrelated operational creditors, including the three largest statutory authorities, as non-voting observers whenever creditors other than scheduled banks and public financial institutions hold more than 66% of the CoC's votes. Why it matters for the exam: operational creditors still have no vote in the CoC; this only gives them a seat at the table.
- 3 June 2026: fewer resolutions in FY2026. An ICRA study of IBBI data found that resolution plans approved by the NCLT fell to 225 in FY2026 from 259 in FY2025, and new admissions fell to 679 from 724. Why it matters for the exam: timelines, not the number of cases, remain the IBC's main weakness.
- 26 May 2026: the 2026 amendments take effect. By a notification of 22 May 2026, the Ministry of Corporate Affairs brought most of the IBC (Amendment) Act, 2026 into force from 26 May. The provisions on group insolvency, cross-border insolvency, the creditor-initiated process (CIIRP) and the Insolvency and Bankruptcy Fund were held back. Why it matters for the exam: the CIIRP is law but is not yet operational.
- 6 April 2026: President's assent to the IBC (Amendment) Act, 2026. The Bill, introduced on 12 August 2025 and examined by a Lok Sabha Select Committee chaired by Baijayant Panda (report of 17 December 2025), was passed by the Lok Sabha on 30 March and the Rajya Sabha on 1 April 2026. It became Act No. 6 of 2026. Why it matters for the exam: it sets 14 days for admission and 30 days for approving plans, narrows the window for withdrawal, and introduces the CIIRP.
- 17 March 2026: Jaiprakash Associates goes to Adani. The NCLT's Allahabad bench approved Adani Enterprises' resolution plan for Jaiprakash Associates, whose creditors had claims of ₹57,185 crore; the CoC had preferred it over Vedanta's bid. Why it matters for the exam: it is one of the largest resolutions of 2026, and shareholders get nothing, which is how the waterfall is supposed to work.
Why India needed a bankruptcy code
The Code came out of the Bankruptcy Law Reforms Committee chaired by T.K. Viswanathan, whose report (November 2015) diagnosed the problem: under the old laws the debtor stayed in control while creditors fought each other in different forums, so value leaked away for years. Its answer was the principle of "creditor in control": once a company defaults, the people who have lent it money, not the promoters, decide whether it is rescued or sold.
The Bill was introduced in December 2015, passed by the Lok Sabha on 5 May 2016 and the Rajya Sabha on 11 May 2016, and received assent on 28 May 2016. It consolidated rules that had been spread across the Sick Industrial Companies Act, 1985 (repealed), the Recovery of Debts and Bankruptcy Act, SARFAESI and the Companies Act.
The Code covers three kinds of debtor:
- Corporate persons (companies and LLPs): the corporate insolvency resolution process (CIRP), liquidation, voluntary liquidation and, for MSMEs, the pre-packaged process. These parts are in force and do almost all the work.
- Personal guarantors to corporate debtors: in force since 1 December 2019. By 30 June 2026, 5,186 applications had been filed against such guarantors, almost all before the NCLT.
- Individuals and partnership firms: the rest of Part III, which would go to the Debt Recovery Tribunal (DRT), is still not notified.
Financial service providers are excluded, except those the government notifies under Section 227, where only the RBI (as regulator) can file. Under this window five NBFCs have been admitted. Four have been resolved: DHFL (to Piramal), Srei Equipment Finance and Srei Infrastructure Finance (to NARCL) and Reliance Capital (to IndusInd International Holdings). AVIOM India Housing Finance was admitted in February 2025.
The institutions
The Code works through four kinds of institution.
- Insolvency and Bankruptcy Board of India (IBBI): the regulator, set up on 1 October 2016 under the Ministry of Corporate Affairs. It writes the process regulations and registers and disciplines the professionals. Its chair is a member of the FSDC.
- Adjudicating authorities: the National Company Law Tribunal (NCLT) for companies, LLPs and their personal guarantors, and the DRT for individuals. Appeals go to the National Company Law Appellate Tribunal (NCLAT) (or the DRAT) and then to the Supreme Court.
- Insolvency professionals (IPs): they run each case as interim resolution professional, resolution professional or liquidator. IPs enrol with one of three insolvency professional agencies (IPAs): the Indian Institute of Insolvency Professionals of ICAI, ICSI Institute of Insolvency Professionals and the Insolvency Professional Agency of Institute of Cost Accountants of India. By June 2026, 4,645 IPs had been registered since 2016. An IP needs a fresh authorisation for assignment to take a case.
- Information utilities (IUs): electronic repositories of debt and default records. There is only one, NeSL (National E-Governance Services Ltd), which had issued about 1.39 lakh records of default by June 2026. The 2026 Act makes an IU record of default filed by a financial institution sufficient proof of default for admission.
Registered valuers (6,190 individuals by June 2026), also regulated by the IBBI, estimate the fair value and liquidation value that frame every negotiation.
The corporate insolvency resolution process (CIRP)
Who can file, and when
A CIRP starts when a default of at least the threshold amount occurs. The Code set it at ₹1 lakh. On 24 March 2020 the government raised it to ₹1 crore to protect MSMEs as COVID hit, and Section 10A suspended filings for defaults in the year from 25 March 2020.
| Section | Applicant | Key condition |
|---|---|---|
| 7 | Financial creditor (bank, NBFC, bondholder, homebuyer) | Proof of default; IU record enough for financial institutions |
| 9 | Operational creditor (supplier, employee, government dues) | Demand notice; no pre-existing dispute; 10 days' wait |
| 10 | Corporate applicant (the company itself) | Board/shareholder approval |
A financial debt is money borrowed against the time value of money. Since the 2018 amendment it includes money raised from homebuyers in real-estate projects; the Supreme Court upheld this in Pioneer Urban Land (2019). An operational debt is a claim for goods, services, employment or statutory dues. Financial creditors filed 48.4% of all CIRPs and operational creditors 45.4%. About 80% of cases with defaults below ₹1 crore came from operational creditors, and about 80% of those above ₹10 crore from financial creditors.
From 26 May 2026 the NCLT must decide a Section 7 application within 14 days. If the default is proved, the application is complete and no disciplinary case is pending against the proposed IP, it must admit; no other ground may be used. This undoes the discretion the Supreme Court had read into the word "may" in Vidarbha Industries (2022). If the tribunal misses 14 days, it must record its reasons in writing.
Admission, moratorium and the CoC
The date of admission is the insolvency commencement date (ICD). Three things happen at once:
- A moratorium (Section 14) begins. No suits, no enforcement of security, no recovery action, no transfer of assets. Essential supplies continue.
- The board of directors is suspended. An interim resolution professional (IRP) takes over management and runs the company as a going concern.
- A public announcement invites claims.
The IBBI's model timeline (Regulation 40A of the CIRP Regulations) then runs as follows, with T as the date of the IRP's appointment: public announcement by T+3, claims by T+14, report constituting the CoC by T+23, first CoC meeting by T+30. At that meeting the CoC confirms the IRP or replaces them with a new resolution professional (RP). The RP prepares an information memorandum, invites resolution plans, checks the bidders' eligibility and puts compliant plans to the vote.
The committee of creditors
The CoC consists of unrelated financial creditors, voting in proportion to their admitted financial debt. Operational creditors have no vote. A related-party lender (for example, a promoter's group NBFC) is excluded. Decisions need:
- 66% of voting share for the big ones: approving a resolution plan, replacing the RP, extending the CIRP, liquidating (this was 75% until the June 2018 amendment);
- 51% for routine decisions;
- 90% to withdraw an admitted case under Section 12A (substituted in 2026).
A plan must pay operational creditors at least what they would get in liquidation, and (since 2026) dissenting financial creditors at least the higher of their liquidation value and their entitlement under the Section 53 waterfall.
Worked example: CoC arithmetic. A company owes financial creditors: Bank A ₹400 crore, Bank B ₹220 crore, Bank C ₹150 crore, an ARC ₹130 crore and an NBFC ₹100 crore, a total of ₹1,000 crore. Voting shares are 40%, 22%, 15%, 13% and 10%.
- A plan backed by A and B has 40 + 22 = 62%, short of 66%. It fails.
- Add C: 62 + 15 = 77%. It passes, and binds B's and C's dissenting peers too.
- Withdrawal backed by A, B, C and the ARC: 40 + 22 + 15 + 13 = 90%. It meets the new Section 12A bar; without the ARC (77%) it would not.
The clock
Section 12 says the CIRP must be completed within 180 days, extendable once by up to 90 days if the CoC votes 66% for it. The 2019 amendment added an outer limit of 330 days including time spent in litigation. In Essar Steel (November 2019) the Supreme Court kept the limit but struck down the word "mandatorily", so the NCLT can go beyond 330 days in exceptional cases. A fast-track CIRP for small companies runs in 90 + 45 days.
Reality is slower. The 1,484 CIRPs that ended in resolution plans by June 2026 took on average 757 days from commencement to NCLT approval, or 633 days after excluding time the tribunals excluded. The 69 plans approved in April–June 2026 took 1,026 days. Cases that ended in liquidation took 540 days on average. The 2026 Act attacks the tribunal stages: 14 days to admit, 30 days to approve or reject a plan (Section 31(2A)), 30 days to order liquidation and 30 days to decide a withdrawal, with written reasons for any delay.
Section 29A: keeping promoters out
Promoters who had defaulted began bidding to buy back their own companies at a discount. An ordinance of 23 November 2017 (later the 2018 amendment Act) added Section 29A, which bars a person from submitting a resolution plan if they or a connected person:
- hold an account classified as an NPA for more than a year (unless they clear the overdues first);
- are a wilful defaulter or an undischarged insolvent;
- are disqualified as a director or barred by SEBI from the securities market;
- have been convicted of certain offences, or have executed an enforceable guarantee for the defaulting company.
A carve-out protects MSMEs, whose promoters may bid for their own firms. The Supreme Court upheld Section 29A in Swiss Ribbons v Union of India (25 January 2019), the case that also upheld the Code as a whole. It explains why ArcelorMittal had to pay off the lenders of Uttam Galva and KSS Petron, about ₹7,500 crore, before its bid for Essar Steel could count.
Outcomes: resolution, withdrawal or liquidation
A CIRP can end in four ways: a resolution plan approved by the NCLT; withdrawal after a settlement (Section 12A); closure on appeal, review or settlement; or liquidation. By 30 June 2026:
The IBBI counts the first three as "rescues": 4,227 companies, or 58% of the 7,301 closed cases. Liquidations outnumber resolution plans by about two to one (3,074 ÷ 1,484 = 2.07). The headline flatters the failures less than it seems, though. About 78% of the companies sent to liquidation were already sick (earlier with the BIFR) or defunct, with assets worth on average just 5% of their debt. They were dead before they arrived.
The Code's biggest effect may be on cases that never reach admission. The IBBI estimates that more than 30,000 applications, involving defaults of nearly ₹14 lakh crore, were settled and withdrawn before admission: the threat of losing control made promoters pay.
How much do creditors recover?
Two ratios matter, and they tell different stories:
- Realisation as a percentage of admitted claims: 30.52% across all 1,484 resolution plans. The haircut on claims is therefore about 69%.
- Realisation as a percentage of fair value: 94.72% (based on the 1,359 cases where fair value was estimated), and 166.58% of liquidation value.
The gap between the two is the point. By the time a company enters the IBC, most of the value behind the claims has already gone. The process recovers almost all of what is left; it cannot recover what was lost in the years before default. Claims were ₹14.27 lakh crore, but the fair value of the assets was only ₹3.92 lakh crore and their liquidation value ₹2.61 lakh crore. Creditors got ₹4.35 lakh crore.
Worked example: three ratios from the June 2026 totals. In ₹ lakh crore: claims 14.27, fair value 3.92, liquidation value 2.61, realisation 4.35.
- Realisation ÷ claims = 4.35 ÷ 14.27 = 0.305, about 30.5%; haircut = 100 − 30.5 = 69.5%.
- Realisation ÷ liquidation value = 4.35 ÷ 2.61 = 1.667, about 167%.
- Fair value ÷ claims = 3.92 ÷ 14.27 = 0.275. Even a perfect sale at fair value would have returned only 27.5 paise per rupee of the claims. (The official fair-value ratio of 94.72% uses only cases where fair value was estimated, so it differs slightly from 4.35 ÷ 3.92.)
Recoveries vary by who started the case. They were 30.58% of claims for cases started by financial creditors, 24.78% for operational creditors and 17.99% for companies that filed themselves. For the 203 large cases with claims above ₹1,000 crore, creditors recovered 31.35% of ₹12.27 lakh crore.
Worked example: DHFL. Financial creditors of Dewan Housing Finance had admitted claims of ₹87,247.68 crore and realised ₹37,167 crore under Piramal's plan. Recovery = 37,167 ÷ 87,247.68 = 42.6%; haircut = 57.4%. That is better than the IBC average, because a housing-finance book of loans keeps more value than a defunct factory.
Compared with the alternatives, the IBC does well. The RBI's Report on Trend and Progress of Banking in India 2024-25 found that of ₹1.04 lakh crore recovered by scheduled commercial banks through all channels (IBC, SARFAESI, DRTs and Lok Adalats), about ₹0.54 lakh crore, or 52.4%, came through the IBC, and the IBC recovery rate rose to 36.6% from 28.3% the year before.
When liquidation follows
Liquidation recovers far less. The 1,757 companies fully liquidated by June 2026 had claims of ₹5.11 lakh crore and assets valued at ₹0.22 lakh crore. Liquidators realised 86.73% of that value: 0.22 × 0.8673 ≈ ₹0.19 lakh crore, roughly 4% of claims (0.19 ÷ 5.11 = 3.7%).
Liquidation and the Section 53 waterfall
If the CoC approves no plan in time, or the NCLT rejects the plan, or the CoC votes to liquidate, the NCLT orders liquidation. The 2026 Act changed the process substantially:
- the CoC continues during liquidation and supervises it;
- the CoC can replace the liquidator with a 66% vote;
- liquidation must be completed within 180 days, extendable by up to 90 days (new Section 54);
- the CoC may choose dissolution instead of liquidation for an empty shell;
- claims verified in the CIRP carry over and are not verified again.
A secured creditor has a choice under Section 52: relinquish its security to the liquidation estate and rank high in the waterfall, or enforce it outside, keep what it raises, and rank lower for any shortfall. The proceeds of the liquidation estate are then distributed under Section 53 in strict order:
- (a) insolvency resolution process costs and liquidation costs, in full;
- (b) workmen's dues for the 24 months before liquidation, ranking equally with debts owed to secured creditors who relinquished their security;
- (c) wages and unpaid dues of other employees for the 12 months before liquidation;
- (d) financial debts owed to unsecured creditors;
- (e) dues to the Central and State governments for up to two years before liquidation, ranking equally with the unpaid balance of secured creditors who enforced their security;
- (f) any remaining debts and dues;
- (g) preference shareholders;
- (h) equity shareholders or partners.
Within a class, debts are paid in full or in equal proportion. Contracts between creditors of equal rank that disrupt this order are disregarded, but the 2026 Act clarifies by illustration that an inter-creditor agreement between two secured creditors is respected.
Government dues after 2026
In State Tax Officer v Rainbow Papers (2022), the Supreme Court treated a tax authority with a statutory charge as a secured creditor, which threatened to push government dues up the waterfall. The 2026 Act reverses this. The definition of "security interest" now excludes interests arising merely by operation of law. An Explanation to Section 53(1)(e) says government dues for the two years before liquidation rank in clause (e) whether or not they are secured, and anything older falls to clause (f). A secured creditor who relinquishes security worth less than its debt is secured only up to that value and unsecured for the rest.
Worked example: running the waterfall. A company in liquidation raises ₹450 crore. Costs are ₹30 crore. Workmen's dues for 24 months are ₹20 crore and secured creditors who relinquished security are owed ₹500 crore. Other employees are owed ₹10 crore; unsecured financial creditors ₹160 crore; government dues ₹40 crore.
- After costs: 450 − 30 = ₹420 crore left.
- Class (b) needs 20 + 500 = ₹520 crore but only ₹420 crore is available, so it is paid in equal proportion: 420 ÷ 520 = 80.8%. Workmen get 20 × 0.808 = ₹16.2 crore; secured creditors get 500 × 0.808 = ₹403.8 crore.
- Nothing is left for employees (c), unsecured lenders (d), the government (e) or shareholders.
If the estate had raised ₹600 crore instead: after costs ₹570 crore; class (b) paid in full (₹520 crore), leaving ₹50 crore; employees paid ₹10 crore, leaving ₹40 crore; unsecured financial creditors get 40 ÷ 160 = 25% of their dues; government dues get nothing.
Pre-packs and other routes
Pre-packaged insolvency for MSMEs (2021)
The pre-packaged insolvency resolution process (PPIRP), Chapter III-A, came by ordinance on 4 April 2021 (the IBC (Amendment) Act, 2021 of 11 August 2021). It is for corporate MSMEs only, with a default threshold of ₹10 lakh. It is a debtor-in-possession model: the promoters keep running the company while a resolution plan, usually their own, is negotiated with creditors before filing. Once the NCLT admits the application, the process must be completed within 120 days. Unrelated financial creditors must approve the start; the 2026 Act lowered that approval from 66% to 51% in value. A Swiss challenge lets outsiders bid against the promoter's base plan if it impairs operational creditors.
Take-up has been tiny. By 30 June 2026, only 18 pre-packs had been admitted, with plans approved in 11. MSME promoters mostly prefer out-of-court settlements or the ₹1 crore threshold that keeps them out of the IBC altogether.
The creditor-initiated process (CIIRP), 2026
The 2026 Act adds a new Chapter IV-A (Sections 58A to 58K), the creditor-initiated insolvency resolution process. Its design:
- only financial creditors notified by the government (expected to be banks and other regulated lenders) may use it, against classes of companies the government notifies;
- it starts out of court, once creditors holding at least 51% of the notified creditors' debt agree, after giving the debtor at least 30 days to respond;
- the debtor's management stays in place, under the oversight of a resolution professional;
- it must finish within 150 days, extendable once by up to 45 days with a 66% CoC vote;
- the CoC can convert it into a regular CIRP with a 66% vote.
The Chapter was not yet in force on 26 May 2026, and the IBBI issued draft CIIRP Regulations for comment in April 2026. Check before the exam whether it has been notified.
Group and cross-border insolvency
The 2026 Act also enables rules for group insolvency (a common bench, coordination between proceedings, a common IP and a committee of CoCs) and cross-border insolvency. Both were left for later notification. Large Indian groups such as Videocon and Jaypee had their companies resolved one by one, which slowed them down.
Landmark cases
| Case | Year | What it established |
|---|---|---|
| Innoventive Industries v ICICI Bank | 2017 | First Supreme Court IBC case; once default is shown, admission follows |
| Bhushan Steel (first of the RBI's 12 large accounts to be resolved) | 2018 | Tata Steel, through Bamnipal Steel, took a 72.65% stake on 18 May 2018, paying ₹35,200 crore to financial creditors and ₹1,200 crore to operational creditors |
| Swiss Ribbons v Union of India | 25 Jan 2019 | Upheld the Code's constitutionality, the financial/operational creditor distinction and Section 29A |
| Essar Steel (CoC v Satish Kumar Gupta) | 15 Nov 2019 | Approved ArcelorMittal's plan of about ₹42,000 crore; commercial wisdom of the CoC is not open to judicial review on merits; the 330-day limit is not mandatory; financial and operational creditors need not be paid equally |
| Lalit Kumar Jain v Union of India | 2021 | Upheld the personal-guarantor provisions; resolution of a company does not free its guarantors |
| Rainbow Papers | 2022 | Treated statutory dues as secured; overridden by the 2026 Act |
| Jet Airways | 7 Nov 2024 | Supreme Court ordered liquidation under Article 142 after the Jalan-Kalrock consortium failed to make its payments for three years, and let lenders keep its ₹200 crore |
| Bhushan Power & Steel | 2025 | A May 2025 judgment rejecting JSW Steel's ₹19,700 crore plan and ordering liquidation was recalled on 31 July 2025; the plan was upheld in September 2025 |
The thread running through them is the primacy of the CoC's commercial judgement, together with intolerance of resolution applicants who fail to implement plans. Do not confuse Bhushan Steel (Tata Steel, 2018) with Bhushan Power & Steel (JSW Steel; plan upheld in 2025).
The 2026 amendments at a glance
| Change | Before | After the 2026 Act |
|---|---|---|
| Admission of a Section 7 application | No fixed time in practice; Vidarbha discretion | 14 days; must admit if default proved; IU record enough |
| Withdrawal (Section 12A) | 90% CoC vote | 90% CoC vote, only after the CoC is formed and before the first invitation for plans |
| NCLT approval of a plan | No time limit | 30 days; plans can be approved in two steps (implementation, then distribution) |
| Liquidation | Liquidator-led; no CoC | CoC supervises; 180 + 90 days; option to dissolve |
| Government dues | Could be "secured" (Rainbow Papers) | Not secured by mere operation of law |
| Pre-pack start | 66% of unrelated FCs | 51% |
| Frivolous or vexatious filing | No specific penalty | Penalty of up to ₹2 crore |
| New processes | — | CIIRP, group and cross-border frameworks (not yet notified) |
Common exam traps
- The IBC does not cover banks or insurers. Failing banks are resolved under the Banking Regulation Act. Certain NBFCs can go to the IBC, but only on an application by the RBI under Section 227.
- ₹1 crore, not ₹1 lakh, has been the default threshold since 24 March 2020. The MSME pre-pack threshold is ₹10 lakh.
- 66% for a plan, 51% for routine decisions, 90% for withdrawal. The 75% threshold was cut to 66% in 2018.
- 180 + 90 = 270 days is the CIRP period; 330 days is the outer limit including litigation. Fast-track is 90 + 45.
- Operational creditors have no vote in the CoC, and related-party financial creditors are excluded.
- Workmen's dues: 24 months; other employees: 12 months; government dues: 2 years. Workmen rank with secured creditors who relinquished security; government dues rank with the shortfall of secured creditors who enforced.
- Bhushan Steel ≠ Bhushan Power & Steel. Tata Steel bought the first; JSW Steel the second.
- "Rescued" ≠ "resolved". The IBBI's 4,227 rescues include withdrawals and closures on appeal, not just the 1,484 resolution plans.
- CIIRP is not yet operational. It is in the 2026 Act but was excluded from the 26 May 2026 commencement.
Key facts at a glance
| Enacted | Assent 28 May 2016; CIRP provisions in force 1 December 2016 |
| Committee behind it | Bankruptcy Law Reforms Committee, chair T.K. Viswanathan (report November 2015) |
| Regulator | IBBI, set up 1 October 2016 |
| Adjudicating authorities | NCLT (companies, LLPs, personal guarantors); DRT (individuals, firms) |
| Appeals | NCLAT/DRAT, then Supreme Court |
| Information utility | One: NeSL |
| Default threshold | ₹1 crore (since 24 March 2020); pre-pack ₹10 lakh |
| CIRP timeline | 180 days + 90 days; 330-day outer limit including litigation |
| CoC votes | 66% plan approval; 51% routine; 90% withdrawal |
| Section 29A | Bars defaulting promoters and connected persons from bidding (November 2017 ordinance) |
| Pre-pack (PPIRP) | MSMEs, 4 April 2021; 120 days; 18 admitted by June 2026 |
| CIRPs admitted (June 2026) | 9,166 |
| Resolution plans / liquidations | 1,484 / 3,074 |
| Realisation | 30.52% of claims; 94.72% of fair value; 166.58% of liquidation value |
| Average time to a resolution plan | 757 days (633 excluding excluded time) |
| IBC (Amendment) Act, 2026 | Assent 6 April 2026 (Act No. 6 of 2026); most provisions in force 26 May 2026 |
| CIIRP | 51% of notified FCs to start; 150 + 45 days; not yet notified |
Exam corner: what to remember
- IBC: 2016, from the Viswanathan committee; regulator IBBI (1 October 2016); adjudication by NCLT for companies and DRT for individuals.
- Who files: Section 7 financial creditor, Section 9 operational creditor, Section 10 the company itself. Threshold ₹1 crore.
- Moratorium (Section 14) from the insolvency commencement date; the IRP takes over from the board.
- CoC of unrelated financial creditors; 66% to approve a plan.
- Timelines: 180 + 90 days, 330 days outer limit; 2026 additions: 14 days to admit, 30 days to approve a plan.
- Section 29A (2017–18) keeps defaulting promoters out; MSMEs exempt from parts of it.
- Section 53 waterfall: costs → workmen (24 months) + relinquishing secured → other employees (12 months) → unsecured FCs → government dues (2 years) + secured shortfall → others → preference → equity.
- Scorecard to 30 June 2026: 9,166 admitted, 1,484 plans, 3,074 liquidations, ₹4.35 lakh crore realised, 30.52% of claims, 94.72% of fair value.
- 2026 Act: CIIRP (51%, 150 + 45 days), 90% withdrawal window, CoC-supervised liquidation (180 + 90 days), government dues not secured by operation of law, pre-pack threshold 51%.
- Cases: Swiss Ribbons (validity), Essar Steel (CoC's commercial wisdom), Jet Airways (liquidation under Article 142, November 2024), Bhushan Steel (Tata Steel, May 2018).
Test yourself
Under the IBC (Amendment) Act, 2026, an admitted CIRP application can be withdrawn under Section 12A with the approval of what share of the committee of creditors' votes?
Show answer
Answer: (d) The new Section 12A requires a 90% voting share, and only between the constitution of the CoC and the first invitation for resolution plans.
The minimum amount of default for initiating a CIRP against a company is:
Show answer
Answer: (c) The threshold was raised from ₹1 lakh to ₹1 crore on 24 March 2020; ₹10 lakh is the threshold for the MSME pre-pack.
The creditor-initiated insolvency resolution process introduced by the 2026 amendment must ordinarily be completed within:
Show answer
Answer: (b) The CIIRP has 150 days, extendable once by up to 45 days with a 66% CoC vote; 120 days applies to the MSME pre-pack.
In the Section 53 liquidation waterfall, workmen's dues for 24 months rank equally with:
Show answer
Answer: (c) Clause (b) puts workmen's dues and debts of secured creditors who relinquished security on the same footing, just after costs.
A liquidation estate has ₹840 crore after paying costs. Workmen's dues (24 months) are ₹40 crore and secured creditors who relinquished security are owed ₹1,160 crore. How much do the workmen receive?
Show answer
Answer: (a) Class (b) totals ₹1,200 crore, so each member gets 840 ÷ 1,200 = 70%; workmen get 0.70 × 40 = ₹28 crore.
Creditors with admitted claims of ₹2,400 crore realise ₹600 crore under a resolution plan. The haircut on their claims is:
Show answer
Answer: (c) Realisation = 600 ÷ 2,400 = 25% of claims, so the haircut is 100 − 25 = 75%.
According to the IBBI, of the 9,166 CIRPs admitted up to 30 June 2026, how many had ended in orders for liquidation?
Show answer
Answer: (c) 3,074 ended in liquidation; 1,484 yielded resolution plans, 1,865 were ongoing and 4,227 were counted as rescued.
Which Supreme Court judgment upheld the constitutional validity of the IBC, including Section 29A?
Show answer
Answer: (b) Swiss Ribbons (25 January 2019) upheld the Code; Essar Steel is the leading case on the CoC's commercial wisdom.
A resolution plan under the CIRP is approved by the committee of creditors with a vote of at least:
Show answer
Answer: (b) The threshold was lowered from 75% to 66% by the 2018 amendment.
In November 2024 the Supreme Court used its powers under Article 142 to order the liquidation of:
Show answer
Answer: (a) The court ordered Jet Airways' liquidation on 7 November 2024 after the Jalan-Kalrock consortium failed to implement its approved plan.
Further reading
- IBBI, Quarterly Newsletter, April–June 2026: the source for every outcome number in this part, with tables on CIRPs, liquidations, timelines, pre-packs and personal guarantors. Read Section C.
- The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Gazette): the full text of the 2026 changes, including the new Chapter IV-A on the CIIRP.
- PRS Legislative Research, IBC (Amendment) Bill, 2025: a clear summary of the Bill, the Select Committee and the issues it raised.
- Report of the Bankruptcy Law Reforms Committee, Volume I (November 2015): the design logic of the Code in the words of the committee that drafted it.
- IBBI, Acts and amendments: the Code itself and every amendment Act since 2016.
- ICRA, Sharp dip in recoveries in FY2026; resolution timelines remain stretched (3 June 2026): an independent look at the FY2026 numbers.
- Viral Acharya, Quest for Restoring Financial Stability in India (SAGE, 2020): a former RBI Deputy Governor on how the IBC and the RBI's 2017–18 directions forced the NPA clean-up.
Sources
- IBBI, Quarterly Newsletter, April–June 2026: CIRP data to 30 June 2026 (Tables 1–4); rescues and liquidations; realisation of 30.52% of claims, 94.72% of fair value and 166.58% of liquidation value; claims, fair value and liquidation value totals; large cases; DHFL and other FiSP resolutions; average days; year-wise admissions; liquidation outcomes; 78% of liquidations BIFR/defunct; pre-packs (18 admitted, 11 plans); personal guarantors; 4,645 IPs; NeSL records of default; 6,190 registered valuers; 30,000 pre-admission withdrawals worth ₹14 lakh crore; RBI Trend and Progress 2024-25 recovery figures; commencement of the 2026 Act from 26 May 2026; CIRP (Fourth Amendment) Regulations of 9 June 2026; IBBI stakeholder consultation on CIIRP regulations (accessed 24 October 2026)
- Insolvency and Bankruptcy Code, 2016 (consolidated text, IBBI): Section 4 threshold, Section 12 timelines (180, 90, 330 days), Section 21 and 30 voting thresholds, Section 53 waterfall text, Chapter III-A pre-pack (120 days, 66%) (accessed 24 October 2026)
- The Insolvency and Bankruptcy Code (Amendment) Act, 2026, Gazette of India, 6 April 2026: 14-day admission, new Section 12A (90%), Section 31 (30 days, two-step approval), liquidation in 180 + 90 days, Section 53 explanations and illustrations, pre-pack 66% → 51%, Chapter IV-A CIIRP (51%, 150 + 45 days, 66% conversion), penalties up to ₹2 crore (accessed 24 October 2026)
- PRS Legislative Research, IBC (Amendment) Bill, 2025: introduction on 12 August 2025, Select Committee chaired by Baijayant Panda (report 17 December 2025), passage on 30 March and 1 April 2026, summary of provisions (accessed 24 October 2026)
- Mondaq, practitioner's guide to the IBC (Amendment) Act, 2026: commencement on 26 May 2026 by notification of 22 May; dissenting-creditor protection; security interest by operation of law; penalty for frivolous proceedings (accessed 24 October 2026)
- ICRA, 3 June 2026: 225 plans in FY2026 vs 259 in FY2025; admissions 679 vs 724 (accessed 24 October 2026)
- TaxGuru (reproducing the PIB release), 1 October 2026: IBBI's tenth Annual Day, Bharat Mandapam, Harsh Malhotra, publication "Shaping the Next Decade of IBC: The Road Ahead", seven sets of amendments (accessed 24 October 2026)
- Outlook Business, March 2026: NCLT Allahabad approval of Adani Enterprises' plan for Jaiprakash Associates on 17 March 2026; claims of ₹57,185 crore; Vedanta's competing bid (accessed 24 October 2026)
- Wikipedia, Insolvency and Bankruptcy Code, 2016: passage on 5 and 11 May 2016, assent 28 May 2016, T.K. Viswanathan committee (accessed 24 October 2026)
- Wikipedia, Tata Steel BSL: Bhushan Steel insolvency from 26 July 2017, 72.65% stake acquired on 18 May 2018, ₹35,200 crore and ₹1,200 crore payments (accessed 24 October 2026)
- Wikipedia, Essar Steel: Supreme Court approval on 15 November 2019, CoC approval of 25 October 2018, ₹7,500 crore paid to Uttam Galva and KSS Petron lenders, plan implemented 16 December 2019 (accessed 24 October 2026)
- Wikipedia, Jet Airways: operations suspended 17 April 2019, referral to the NCLT in June 2019, Supreme Court liquidation order of 7 November 2024 (accessed 24 October 2026)
- Business Standard, 31 July 2025: Supreme Court recalled its 2 May 2025 judgment rejecting JSW Steel's ₹19,700 crore plan for Bhushan Power & Steel (accessed 24 October 2026)
- ICRA rating rationale, JSW Steel: Supreme Court judgment of 26 September 2025 upholding JSW Steel's resolution plan for Bhushan Power & Steel (accessed 24 October 2026)
- IBBI, model timeline under Regulation 40A (caclubindia summary): T+3, T+14, T+23 and T+30 steps of the CIRP (accessed 24 October 2026)