Insolvency Reform: Streamlining Business Failure Solutions

The government unveiled a bill to reform insolvency law, introducing initiatives like out-of-court resolutions, group insolvency frameworks, and cross-border protocols. The proposed changes aim to expedite processes, maximize asset value, and enhance governance, benefiting stakeholders and promoting ease of business operations.

The government on Tuesday set forth an ambitious plan to overhaul the insolvency landscape by proposing a series of amendments. The new bill, introduced in the Lok Sabha, seeks to implement an out-of-court mechanism to handle authentic business collapses efficiently, alongside new frameworks for group and cross-border insolvencies.

Finance and Corporate Affairs Minister Nirmala Sitharaman introduced the Insolvency and Bankruptcy Code (Amendment) Bill, 2025. The legislation aims to cut down on delays, boost stakeholder value, and improve governance. These changes are expected to smoothen insolvency admissions and make processes faster and more transparent.

The bill facilitates a 'creditor-initiated insolvency resolution process.' It allows financial institutions to kickstart insolvency resolutions outside the court and offers streamlined procedures for group and cross-border insolvencies. This move serves as a hopeful stride towards easing judicial burdens and bolstering business operations.

(With inputs from agencies.)