Navigating the IBC Crunch: Challenges in India's Insolvency Framework

In 2025, India's Insolvency and Bankruptcy Code faced challenges due to prolonged resolution processes and limited capacity. Despite new appointments, significant delays persisted, compounded by litigation and infrastructure issues. Experts emphasized the need for systemic improvements to streamline insolvency proceedings and enhance tribunal efficiency.

In 2025, the Insolvency and Bankruptcy Code (IBC) in India confronted severe challenges as resolution processes extended beyond prescribed timelines, creating significant stress within the system. The National Company Law Tribunal (NCLT) struggled to manage a backlog exacerbated by limited capacity and infrastructure constraints.

Legal experts and senior advocates pointed out systemic delays, with nearly 10,000 cases stuck at the admission stage, locking up over Rs 10 lakh crore in distressed assets. This backlog was further fueled by ongoing litigation under Section 60(5) of IBC and incomplete records, compounding the inefficiencies within the NCLT.

Despite recent government appointments, the NCLT's capacity to handle the volume and complexity of cases remained inadequate. The influence of parallel regulatory regimes and the rise of contested defaults highlighted the need for comprehensive reform to fortify the IBC framework and improve the tribunal's functionality.

(With inputs from agencies.)