Last verified: July 3, 2026
On 26 May 2026, the rules of corporate rescue in India shifted more than they had in almost a decade. That was the day most of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 came into force, and with it a creditor-led resolution route, a 14-day deadline for tribunals to admit cases, and a legislative reversal of one of the most criticised Supreme Court rulings on tax dues. The Insolvency and Bankruptcy Code, 2016 was already the single most consequential economic law India passed in a generation. It just got a serious upgrade.
Rewind to why it exists. Before 2016, a lender chasing a defaulting company could spend years in a maze of overlapping laws: the Sick Industrial Companies Act and its Board for Industrial and Financial Reconstruction, debt-recovery tribunals, the SARFAESI route, and winding-up petitions before the High Courts. Recovery averaged around 26 paise on the rupee, and the process dragged on for roughly four years (World Bank estimates from the pre-IBC era). The IBC flipped the model on its head. It took control away from the defaulting promoter and handed it to the creditors, on a strict clock.
Has it delivered? Partly. As on 31 March 2026, tribunals had admitted 8,987 corporate insolvency cases; creditors had realised about Rs 4.11 lakh crore under approved resolution plans, roughly 31 percent of their admitted claims (IBBI data). The headline drama tends to come from the giants. The saga over Bhushan Power and Steel ran the full arc: the Supreme Court set aside the buyer’s resolution plan and ordered liquidation in May 2025, then recalled that judgment, and finally upheld the plan in September 2025. One steel plant, three Supreme Court outcomes in five months. That’s the IBC in practice: powerful, fast on paper, and still contested at the edges.
So who is this guide for? Whether you’re a law student meeting the Code for the first time, a founder whose company is under creditor pressure, a lender weighing a Section 7 filing, or a professional sitting an exam, this is the single page that carries the whole arc. The process, the liquidation waterfall, the pre-pack and personal-insolvency routes, the 2026 amendments, the landmark cases, and an honest look at whether the Code has actually worked.
One working definition before we go deep.
The Insolvency and Bankruptcy Code, 2016 is India’s consolidated law for resolving the insolvency of companies, limited liability partnerships, partnership firms, and individuals within fixed timelines. It moves control of a defaulting company from its owners to a committee of its creditors, who decide whether to rescue the business through a resolution plan or send it to liquidation, with the National Company Law Tribunal as the adjudicating authority.
Use the table of contents to jump. Nothing below assumes you read front to back.
What is the Insolvency and Bankruptcy Code, 2016?
Here’s the thing the Code got right that everything before it got wrong: it treats insolvency as a business problem with a deadline, not a lawsuit that can run forever. The Insolvency and Bankruptcy Code, 2016 received Presidential assent on 28 May 2016 and consolidated a scattered pre-existing regime into one law. Out went the Sick Industrial Companies Act, 1985 and its much-criticised Board for Industrial and Financial Reconstruction. The winding-up jurisdiction of the company courts moved across to a specialised tribunal. And two older debt-recovery statutes, the Recovery of Debts and Bankruptcy Act, 1993 and the SARFAESI Act, 2002, were left standing but subordinated: where they clash with the Code, Section 238 gives the IBC overriding effect.
What was the point of all that consolidation? Speed and value. The Code’s preamble is unusually candid about its own goals: time-bound resolution, maximisation of the value of a debtor’s assets, promotion of entrepreneurship and credit, and balancing the interests of all stakeholders. Notice what sits at the top of that list. Not recovery for banks alone. Value, for everyone with a stake.
The deepest change was philosophical. The old system was “debtor in possession”: a defaulting promoter kept the keys while creditors queued outside. The IBC installed a “creditor in control” model instead. Once a company is admitted into the process, its board is suspended and an insolvency professional runs the show under the supervision of the creditors. The promoter can still bid to keep the company, but only by paying, and only if Section 29A doesn’t disqualify them. (More on that below.)
That single shift is why bankers, not borrowers, set the tempo now. It’s also why the Code has been litigated so heavily, all the way to constitutional challenge, which it survived. The 2026 amendments, as we’ll see, push the creditor-in-control idea even further.
The architecture of the Code: five parts and who it covers
The Code is built in five parts, and knowing which part you’re in tells you almost everything about which tribunal, which timeline, and which procedure applies. Think of it as a map before the road trip.
| Part | What it covers | Who it applies to |
|---|---|---|
| Part I | Preliminary: definitions, application, the Rs 1 crore threshold (Section 4) | Everyone |
| Part II | Insolvency resolution and liquidation for corporate persons (Sections 4 to 77) | Companies, LLPs |
| Part III | Insolvency resolution and bankruptcy for individuals and partnership firms (Sections 78 to 187) | Individuals, firms, personal guarantors |
| Part IV | Regulation of professionals, agencies, information utilities; the IBBI (Sections 188 to 223) | The institutional machinery |
| Part V | Miscellaneous, including Section 238 (overriding effect) and Section 238A (limitation) | Everyone |
Most of the action, and almost all of the famous case law, lives in Part II. That’s the corporate insolvency resolution process, or CIRP, plus liquidation. Part III is the personal-insolvency half, and it has been switched on only in stages, which trips up a lot of readers. So does one common misconception: that “insolvency” and “bankruptcy” mean the same thing under the Code. They don’t. For corporate debtors, the Code speaks of insolvency resolution and liquidation; “bankruptcy” is a Part III concept that applies to individuals and firms. Small distinction, real consequences.
Who can be dragged into the process? Companies and LLPs are the core. Partnership firms and individuals sit in Part III. One category matters far more than its size suggests: personal guarantors to corporate debtors, usually the promoters who signed personal guarantees for the company’s loans. They were brought into the net in December 2019, and the litigation that followed reached the Supreme Court twice.
The four pillars: who actually runs the process
Ask most people who runs insolvency in India and they’ll say “the NCLT.” That’s a quarter right. The Code stands on four institutional pillars, and confusing their roles is the fastest way to misread a case.
The first pillar is the adjudicating authority. For companies and LLPs, that’s the National Company Law Tribunal (NCLT), with appeals to the National Company Law Appellate Tribunal (NCLAT) and then the Supreme Court. For individuals and firms, it’s the Debt Recovery Tribunal instead. The tribunal admits cases, sanctions or rejects resolution plans, and orders liquidation. What it does not do, as the Supreme Court has said more than once, is second-guess the creditors’ commercial judgment.
The second pillar is the regulator: the Insolvency and Bankruptcy Board of India (IBBI), set up on 1 October 2016. It writes the regulations, registers professionals, and publishes the data everyone cites (including the numbers in this guide). The third pillar is the profession itself: insolvency professionals (IPs) who actually run the process, organised under insolvency professional agencies. If you want the granular version of what these practitioners do day to day, iPleaders has a dedicated explainer on the role of the insolvency resolution professional under the IBC.
The fourth pillar is the quiet one: information utilities. A single licensed utility, the National e-Governance Services Limited (NeSL), stores and authenticates records of debt and default, so that a creditor filing a case can produce hard proof rather than a disputed ledger. Why does this matter? Because a Section 7 case can turn entirely on whether “default” is established, and an authenticated record from an information utility is close to conclusive. Boring infrastructure, decisive in practice.
Corporate insolvency resolution process (CIRP)
This is the heart of the Code, so slow down here. CIRP is the process by which a defaulting company is either rescued through a resolution plan or sent onward to liquidation. It runs on a clock, it’s driven by creditors, and it has a defined choreography that repeats in every case from a small trader to a steel major.
Who can initiate CIRP: Sections 7, 9 and 10, and the Rs 1 crore threshold
Three doors lead in. A financial creditor (a bank, an NBFC, a bondholder, or a home-buyer as a class) files under Section 7. An operational creditor (a supplier, an employee, a tax authority) must first serve a demand notice under Section 8, wait ten days, and then file under Section 9 if the debt is unpaid and genuinely undisputed. The corporate debtor itself can file under Section 10. iPleaders covers the mechanics of a financial creditor’s application in detail in its note on filing under Section 7 of the IBC.
There’s a floor. The minimum default needed to trigger CIRP was Rs 1 lakh when the Code began. In March 2020, the government raised it to Rs 1 crore, largely to keep small businesses out of the tribunals during the pandemic, and that Rs 1 crore threshold still holds in 2026. Below it, the Code’s door stays shut, and the creditor is back to the ordinary recovery routes.
From admission to a resolution plan: moratorium, committee of creditors, and Section 29A
Once the tribunal admits the case, several things happen at once. An interim resolution professional takes charge and the board is suspended. A moratorium under Section 14 slams down: no new suits, no asset transfers, no SARFAESI enforcement, no recovery of leased property, and no cutting off essential supplies. The point is to freeze the company as a going concern so its value doesn’t bleed out while a rescue is negotiated. In Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, (2021) 7 SCC 209, the Supreme Court even restrained a power utility from terminating a critical supply contract triggered solely by the insolvency, precisely to protect that going-concern value.
Next, the committee of creditors (CoC) is constituted under Section 21 from the company’s financial creditors, each voting in proportion to the debt it’s owed. The CoC confirms or replaces the resolution professional (Sections 22 and 23), who then prepares an information memorandum and invites resolution plans from outside bidders. Here sits one of the Code’s sharpest teeth: Section 29A, which disqualifies wilful defaulters, undischarged insolvents, and, most pointedly, the very promoters whose default sank the company, from buying it back cheaply. The Supreme Court upheld Section 29A in Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17, in a judgment that also blessed the constitutional validity of the Code as a whole.
The CoC then votes. A resolution plan needs the approval of creditors holding at least 66 percent of the voting share (Section 30), after which the tribunal sanctions it under Section 31. Once sanctioned, the plan binds everyone: the company, its creditors, its employees, its guarantors, and the government. And here’s a number people still get wrong. The approval threshold is 66 percent, not the old 75 percent, which was lowered by amendment back in 2018. If you see 75 percent quoted, you’re reading a pre-2018 source.
The CIRP timeline: Section 12, the 330-day limit, and the new 14-day admission rule
How long can all this take? Section 12 sets 180 days, extendable once by 90, with an outer limit of 330 days that includes time lost to litigation. That outer limit used to say the process “shall mandatorily” finish in 330 days. In Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, the Supreme Court struck down that word “mandatorily” as arbitrary, so the 330 days is a strong norm rather than a guillotine. Essar Steel did something bigger too: it confirmed that the CoC’s commercial wisdom is largely beyond judicial review, an idea first laid down in K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150.
For years, the weak link was admission itself: tribunals sat on Section 7 cases for months, and Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352 made it worse by holding that a tribunal “may” decline to admit even a proven default. The 2026 amendment answers that directly, with a 14-day deadline to admit or reject. We’ll come to it.
When resolution fails: liquidation and the Section 53 waterfall
Not every company can be saved, and the Code is honest about that. When no resolution plan is approved within the timeline, or the CoC decides the business isn’t viable, or an approved plan is breached, the tribunal orders liquidation under Section 33. The resolution professional usually becomes the liquidator, sells the assets, and distributes the proceeds. The question everyone asks is: who gets paid first?
That order is the famous “waterfall” in Section 53, and it’s worth knowing cold because it decides real money.
- The costs of the insolvency and liquidation process, paid in full first.
- Then, ranking equally, the dues of workmen for the 24 months before liquidation, alongside secured creditors who give up their security to the common pool.
- Wages and unpaid dues of other employees for the preceding 12 months.
- Unsecured financial creditors.
- Then, ranking equally, government dues for the preceding two years, alongside any balance owed to a secured creditor who enforced its security separately.
- Any remaining debts.
- Preference shareholders.
- Equity shareholders or partners, last in line.
Read that ladder twice and a pattern jumps out: the government sits low, well below secured creditors, and equity owners are wiped out before they see a rupee. That deliberate demotion of tax dues is exactly what the litigation in State Tax Officer v. Rainbow Papers Ltd., (2023) 9 SCC 545 unsettled, before the 2026 amendment restored it (covered in the amendments section). A solvent company that simply wants to close down cleanly, by the way, doesn’t need any of this: it uses voluntary liquidation under Section 59, which is a members’ decision backed by a declaration of solvency. For the priority-of-claims mechanics in depth, iPleaders has a focused breakdown of liquidation and the priority of claims under the IBC.
Beyond standard CIRP: pre-pack and personal insolvency
Standard CIRP is the main road, but it isn’t the only one. Two side routes matter, and a third has just been rewritten.
The pre-packaged insolvency resolution process (PPIRP) arrived in 2021 for corporate micro, small, and medium enterprises. The idea is elegant: an MSME in distress negotiates a rescue plan with its creditors before formally entering the process, then runs it through the tribunal on a compressed 120-day timeline, with the existing management staying in control under a “debtor in possession” model rather than being suspended. The default threshold is a low Rs 10 lakh, and there’s a “Swiss challenge” mechanism so third parties can beat the promoter’s base plan. Good design, thin uptake: as on 31 March 2026, only 18 pre-pack cases had been admitted. iPleaders traces the reasoning behind the mechanism in its piece on the advent of pre-pack insolvency for MSMEs.
Then there’s the personal side. Part III of the Code, dealing with individuals and firms, has been switched on cautiously. The category that’s actually live is personal guarantors to corporate debtors, notified into force on 1 December 2019. Why does that matter so much? Because promoters routinely guarantee their company’s loans, so when the company defaults, the creditor can pursue the guarantor personally, before the same tribunal. The promoters challenged this and lost in Lalit Kumar Jain v. Union of India, 2021 SCC OnLine SC 396, where the Court also held that approving a company’s resolution plan does not automatically release the guarantor. The broader personal-insolvency machinery (Sections 95 to 100) then survived its own constitutional test in Dilip B. Jiwrajka v. Union of India, (2024) 5 SCC 435, with the Court reading a right to be heard into the process. For the guarantor angle specifically, iPleaders has a detailed analysis of insolvency of personal guarantors to corporate debtors.
The third route, the old fast-track process for smaller companies under Sections 55 to 58, has effectively been replaced. The 2026 amendment omits it and installs a creditor-initiated process in its place. That’s the headline change, and it deserves its own section.
What the Insolvency and Bankruptcy Code (Amendment) Act, 2026 changes
This is the freshest and most important part of the Code’s story, so let’s be precise about what’s actually law and what’s still on paper. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Act No. 6 of 2026) received Presidential assent on 6 April 2026. Note the citation trap: it was introduced as the 2025 Bill but enacted as the 2026 Act. Crucially, it doesn’t all switch on at once. By notification S.O. 2625(E), the government brought a large batch of its provisions into force on 26 May 2026, while a couple of the biggest structural pieces are still waiting for rules. Here’s what changed, and what hasn’t.
The marquee reform is the creditor-initiated insolvency resolution process (CIIRP), a new Chapter IV-A (Sections 58A to 58K). It lets a notified class of financial creditors holding at least 51 percent of the financial debt start a resolution out of court, after a 30-day notice to the company, on a 150-day timeline extendable once by 45 days. The twist: unlike standard CIRP, the board stays in control under the resolution professional’s supervision (debtor in possession), and the Section 14 moratorium is not automatic. One honest caveat, because it matters: the CIIRP provisions are in force, but the IBBI’s operational regulations for it were still in draft as of mid-2026, so the process isn’t yet fully running in practice. Watch that space.
The change that will bite most often is the mandatory admission timeline. Sections 7, 9, and 10 have been rewritten so the tribunal “shall” admit or reject a case within 14 days, and, once debt and default are established, it can’t refuse admission on other grounds. Read plainly, that legislatively curtails the discretion the Supreme Court had recognised in Vidarbha Industries. The single biggest complaint about the Code, admission delay, has been answered with a deadline.
Three more in-force changes are worth flagging. Section 12A, the withdrawal provision, now allows a case to be withdrawn only after the CoC is formed and before the first invitation for resolution plans goes out, still needing 90 percent CoC approval. The definition of “security interest” in Section 3(31) has been clarified to require an actual agreement between parties, so a charge arising purely by operation of a tax statute no longer counts, which legislatively reverses the Rainbow Papers outcome and pushes government dues back down the Section 53 waterfall. And the “clean slate” principle from the case law, that an approved plan extinguishes stale claims and binds the government, is now written into the Code itself.
What isn’t live yet? The two most ambitious pieces. The Act adds enabling frameworks for group insolvency (a new Chapter VA, Section 59A) and for cross-border insolvency (Section 240C, with Section 240B providing for an electronic insolvency portal). Both are framework provisions only. As of early July 2026 they had not been notified, the operative rules are awaited, and, worth stressing, India has not adopted the UNCITRAL Model Law wholesale; Section 240C merely empowers the government to build rules in that direction. Alongside these sit tighter penalties for frivolous filings and stronger avoidance-transaction powers (creditors can now pursue avoidance if the professional won’t). Taken together, the 2026 Act is the most significant rewrite of the Code since it was passed. Just don’t mistake “enacted” for “fully operational” on every clause.
Landmark judgments that shaped the IBC
You can’t understand the Code from the bare sections alone, because the Supreme Court has done much of the load-bearing work. A handful of rulings explain how the IBC actually behaves. Which ones truly matter?
Start with Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, the first big interpretation, which held that once default is established a Section 7 case must be admitted and that the Code overrides inconsistent state law. Swiss Ribbons then upheld the whole statute, including Section 29A. Essar Steel and K. Sashidhar together built the doctrine that the CoC’s commercial wisdom is close to unreviewable. And Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416 confirmed that home-buyers count as financial creditors, which is why stalled real-estate projects now end up in the tribunals.
Two rulings reshaped how far the Code reaches. Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657 laid down the “clean slate” doctrine, that a successful bidder takes the company free of surprise claims once the plan is approved. Then came the messy part. Rainbow Papers held that a state’s tax dues could rank as secured debt, jolting the Section 53 hierarchy; the Court narrowed it in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd., (2023) 10 SCC 60, and Parliament has now overridden it outright through the 2026 amendment. And the most recent saga, Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC 1165, ended in September 2025 with the Court upholding the resolution plan after first setting it aside, a pointed reminder that finality is the Code’s whole purpose. For a longer roll-call, iPleaders maintains a roundup of landmark judgments on the IBC.
Has the IBC actually worked? The track record
Numbers, not adjectives. That’s the fair way to judge a law that promised speed and value, so here’s the scorecard as on 31 March 2026, drawn from the IBBI’s own quarterly data.
Tribunals had admitted 8,987 corporate insolvency cases since December 2016. Of the cases that have closed, the IBBI counts about 58 percent as “rescued” (through a resolution plan, an appeal, a review, or a withdrawal) against roughly 42 percent that went to liquidation. In raw terms, 1,419 companies were saved through approved resolution plans and 3,003 were sent to liquidation, though a large share of those liquidations were legacy shells with almost nothing left to recover. Creditors had realised about Rs 4.11 lakh crore under resolution plans (on the fuller dataset to December 2025), which works out to roughly 31 percent of admitted claims, but about 167 percent of what those assets would have fetched in liquidation. Read that second number again: the Code has generally beaten the break-up value, which is the point of trying to rescue rather than dismember.
Now the uncomfortable column. Speed was the founding promise, and it’s the weakest result. Against a 330-day outer limit, resolution plans have taken about 621 days on average to conclude, and the trend has been getting slower, not faster. That gap between the 330-day design and the 621-day reality is the single strongest argument for the 2026 amendment’s 14-day admission deadline.
Is 31 percent recovery good? It depends on your baseline. Set against the pre-IBC world of roughly 26 paise on the rupee and four-year timelines, it’s a clear improvement (though the World Bank’s old “recovery rate” and the IBBI’s “realisation against admitted claims” measure different things, so treat any single comparison with care). The honest verdict: the Code changed creditor behaviour and repriced the cost of default long before most cases ever reach a tribunal, which may be its largest achievement of all. The 2026 reforms are a bet that the next decade can add the one thing the first decade lacked, which is speed.
Professionals who can actually run an insolvency, read a resolution plan, and argue admission before the NCLT are still in short supply, and the 2026 amendments have only widened the demand. LawSikho’s Certificate Course in Banking, Finance and Insolvency Laws is built to close that gap, from the CIRP timeline and the Section 53 waterfall to the new creditor-initiated route, with live sessions and drafting work reviewed by practitioners.
Frequently asked questions
1. What is the Insolvency and Bankruptcy Code, 2016 in simple terms?
It’s India’s single, consolidated law for dealing with insolvency: the situation where a person or company can’t pay its debts. It sets up a time-bound process, run by creditors and overseen by the National Company Law Tribunal, to either rescue a defaulting company through a resolution plan or liquidate it and distribute the proceeds in a fixed order of priority.
2. What is the difference between insolvency and bankruptcy under the IBC?
Insolvency is the state of being unable to pay debts. Under the Code, corporate debtors go through “insolvency resolution” and, if that fails, “liquidation.” “Bankruptcy” is a term the Code reserves for individuals and partnership firms under Part III. So a company is never technically “bankrupt” under the IBC, it’s liquidated.
3. Who can file for insolvency under the IBC?
Three types of applicant. A financial creditor (such as a bank or bondholder) files under Section 7. An operational creditor (a supplier, employee, or tax authority) files under Section 9 after a Section 8 demand notice. The corporate debtor itself can file under Section 10.
4. What is the minimum default amount to start CIRP?
Rs 1 crore. The threshold was Rs 1 lakh when the Code began in 2016, but the government raised it to Rs 1 crore in March 2020, and that figure still applies in 2026. A default below Rs 1 crore can’t trigger the corporate insolvency process.
5. What is CIRP?
CIRP stands for the corporate insolvency resolution process. It’s the core procedure of the Code: once the tribunal admits a company, a resolution professional takes over, a committee of creditors is formed, and outside bidders submit resolution plans. If the committee approves a plan by a 66 percent vote and the tribunal sanctions it, the company is rescued. If not, it goes to liquidation.
6. How long does the insolvency process take under the IBC?
The statutory limit is 330 days, made up of 180 days plus a 90-day extension, with the balance for litigation. In practice, resolution plans have averaged around 621 days to conclude (IBBI data as on 31 March 2026). The 2026 amendment adds a 14-day deadline for tribunals to admit or reject a case, aimed at cutting that delay.
7. What is the moratorium under Section 14?
It’s a legal freeze that begins the moment a company is admitted into CIRP. During the moratorium, no one can file or continue suits against the company, transfer its assets, enforce security under SARFAESI, or cut off essential supplies. The purpose is to preserve the company as a going concern while a rescue is negotiated.
8. What is the committee of creditors (CoC)?
The CoC is the decision-making body in CIRP, made up of the company’s financial creditors, each voting in proportion to the debt owed to it. It appoints the resolution professional and votes on resolution plans. A plan needs approval by creditors holding at least 66 percent of the voting share. Courts treat the CoC’s commercial decisions as largely non-reviewable.
9. What is the Section 53 waterfall?
It’s the order in which money is distributed when a company is liquidated. Process costs come first, then workmen’s dues and secured creditors together, then other employees, unsecured financial creditors, government dues, remaining debts, preference shareholders, and finally equity shareholders. Government dues deliberately rank low, below secured creditors.
10. What is a pre-packaged insolvency (pre-pack)?
Introduced in 2021 for MSMEs, a pre-pack lets a distressed small company agree a rescue plan with its creditors before formally entering the process, then complete it through the tribunal on a 120-day timeline while management stays in control. The minimum default is Rs 10 lakh. Uptake has been low: only 18 cases were admitted up to 31 March 2026.
11. What is Section 29A of the IBC?
Section 29A is the eligibility filter for resolution applicants. It disqualifies certain people from submitting a resolution plan, most importantly the defaulting promoters of the company, along with wilful defaulters and undischarged insolvents. Its purpose is to stop those responsible for the default from buying the company back at a discount.
12. What did the IBC (Amendment) Act, 2026 change?
It introduced a creditor-initiated resolution process (CIIRP) in a new Chapter IV-A, a mandatory 14-day admission timeline that curtails the Vidarbha discretion, a tightened Section 12A withdrawal rule, and a fix to Section 3(31) that reverses the Rainbow Papers ruling on tax dues. Most provisions came into force on 26 May 2026; the group and cross-border insolvency frameworks are enacted but not yet notified.
13. Are personal guarantors covered by the IBC?
Yes. Personal guarantors to corporate debtors were brought under the Code from December 2019, and the Supreme Court upheld this in Lalit Kumar Jain v. Union of India (2021). Approving a company’s resolution plan does not automatically release its personal guarantor, so a promoter who guaranteed the company’s loans can still be pursued personally.
14. How much money have creditors recovered under the IBC?
Creditors had realised about Rs 4.11 lakh crore under approved resolution plans (on the dataset to December 2025), which is roughly 31 percent of their admitted claims but around 167 percent of the liquidation value of those assets (IBBI figures). The realisation rate looks modest against total claims but strong against what the assets would have fetched in a break-up.
References
Case Law
- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531. Decided 15 November 2019 (Supreme Court of India).
- Dilip B. Jiwrajka v. Union of India, (2024) 5 SCC 435. 2023 INSC 1018; decided 9 November 2023 (Supreme Court of India).
- Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657. 2021 INSC 269; decided 13 April 2021 (Supreme Court of India).
- Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, (2021) 7 SCC 209. Decided 8 March 2021 (Supreme Court of India).
- Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407. Decided 31 August 2017 (Supreme Court of India).
- K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150. Decided 5 February 2019 (Supreme Court of India).
- Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC 1165. Decided 26 September 2025 (Supreme Court of India; plan upheld on recall).
- Lalit Kumar Jain v. Union of India, 2021 SCC OnLine SC 396. (2021) 9 SCC 321; decided 21 May 2021 (Supreme Court of India).
- Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd., (2023) 10 SCC 60. 2023 INSC 626; decided 17 July 2023 (Supreme Court of India).
- Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416. Decided 9 August 2019 (Supreme Court of India).
- State Tax Officer v. Rainbow Papers Ltd., (2023) 9 SCC 545. Decided 6 September 2022 (Supreme Court of India).
- Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17. 2019 INSC 68; decided 25 January 2019 (Supreme Court of India).
- Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352. 2022 INSC 700; decided 12 July 2022 (Supreme Court of India).
Statutes
- Insolvency and Bankruptcy Code, 2016; sections cited: 3(31), 4, 7, 8, 9, 10, 12, 12A, 14, 21, 22, 23, 29, 29A, 30, 31, 33, 53, 55 to 59, 60, 238, 238A, and Parts I to V.
- The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Act No. 6 of 2026); Presidential assent 6 April 2026; most provisions in force from 26 May 2026 (MCA notification S.O. 2625(E)); introduced new Chapter IV-A (Sections 58A to 58K, CIIRP), amended Sections 7, 9, 10, 12A, and 3(31), and added enabling frameworks for group insolvency (Chapter VA / Section 59A) and cross-border insolvency (Section 240C), not yet notified.
Secondary sources (optional)
- Insolvency and Bankruptcy Board of India, Quarterly Newsletter, January to March 2026 (data as on 31 March 2026): CIRP admissions, outcomes, realisation, and timelines.
- World Bank, pre-IBC recovery-rate and resolution-time estimates (used only for the before-and-after contrast).
Legal disclaimer
This article is published for informational and educational purposes. It does not constitute legal advice and should not be relied upon as a substitute for consultation with a qualified advocate, company secretary, or registered insolvency professional on the specific facts of any matter. The Insolvency and Bankruptcy Code, 2016 is amended frequently, and several provisions of the 2026 Amendment Act depend on commencement notifications and subordinate regulations that were still evolving when this article was written. Readers should verify the current position before acting. iPleaders, its authors, and LawSikho assume no liability for any loss arising from reliance on the content here.
