The IBC Amendment Act 2026 changes the position of creditors and resolution professionals mainly through provisions that came into force on 26 May 2026, which make admission of a financial creditor’s application mandatory within fourteen days, bar withdrawal at two defined stages, re-anchor the avoidance look-back window, and put the committee of creditors in charge of supervising liquidation. For resolution professionals, the same tranche adds a duty to verify and value claims, a mandatory duty to file avoidance applications, and a bar on ever becoming the liquidator of the same corporate debtor. The creditor-initiated resolution process that most coverage treats as the headline reform is enacted but has not been notified, so no creditor can use it yet. What is live is a tighter version of the existing process, not a new one.
This article sets out what the IBC Amendment Act 2026 changes for creditors and for resolution professionals, provision by provision, separating what is in force from what is not.
The Insolvency and Bankruptcy Code, 2016 completed ten years in May 2026, and this is its seventh amendment. The problem it was written against is visible in the Insolvency and Bankruptcy Board of India’s own numbers. As on 31 March 2026, cumulative realisation stood at 30.56 percent of admitted claims, and the average corporate insolvency resolution process that produced an approved plan took 621 days even after excluding time the tribunal formally excluded.
The statutory outer limit for that process is 330 days. ICRA’s analysis of Board data put almost 78 percent of ongoing processes past 270 days as on the same date. Against a benchmark like that, an amendment built around fourteen-day and thirty-day deadlines is a statement about where Parliament thinks the delay sits.
Whether the deadlines bind is a separate question, and the broader framework of the Insolvency and Bankruptcy Code, 2016 is the right starting point for readers who want the machinery underneath this one. What follows assumes that machinery and looks only at what moved.
Provisions of the IBC Amendment Act 2026 in force from 26 May 2026
The provisions in force from 26 May 2026 are the procedural discipline package: admission, withdrawal, avoidance, the liquidation waterfall, the committee of creditors, and the disciplinary regime for insolvency professionals. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 received Presidential assent on 6 April 2026 and sits on the books as Act No. 6 of 2026, originating from Bill No. 107-F of 2025.
Section 1(2) of the Amendment Act allowed the Central Government to appoint different dates for different provisions. On 22 May 2026, the Ministry of Corporate Affairs issued notification S.O. 2625(E), appointing 26 May 2026 for a specified list.
That list covers most of the Act. It does not cover the parts that most published analysis treats as the reform.
Which provisions of the IBC Amendment Act 2026 are not yet in force?
The provisions not yet in force are the creditor-initiated process, group insolvency, the electronic portal and cross-border insolvency. Those four frameworks, and four provisions connected to them, were left out of the commencement notification, and none of them operates today.
| Amendment Act section | Inserts or amends | Subject | Status |
|---|---|---|---|
| 40 | Chapter IV-A, Sections 58A to 58K | Creditor-initiated insolvency resolution process | Not in force |
| 42 | Chapter V-A, Section 59A | Group insolvency | Not in force |
| 71 | Section 240B | Electronic portal | Not in force |
| 71 | Section 240C | Cross-border insolvency | Not in force |
| 7 | Section 11(ba) | Bar on debtors affected by a creditor-initiated process | Not in force |
| 45 | Section 65(3) | Penalty for fraudulent initiation of a creditor-initiated process | Not in force |
| 47 | Section 67A | Offence extended to a creditor-initiated process | Not in force |
| 60 | Section 208(1)(cb) | Insolvency professional’s duty to act in a creditor-initiated process | Not in force |
The commencement was surgical. Sections 34(a)(i) and 34(a)(ii) of the Amendment Act, which insert cross-references to the creditor-initiated process into the pre-packaged process provisions, were carved out individually, as was sub-clause (xx) of Section 70(b). Every reference to the creditor-initiated process was stripped out of the tranche that commenced, one sub-clause at a time.
The creditor-initiated insolvency resolution process, abbreviated in the Act to CIIRP, is the one that matters most for creditors, and it is dealt with in full further below. Group insolvency and cross-border insolvency are covered separately in cross-border and group insolvency under the IBC Amendment Act 2026, and this article does not revisit them.
Amendment Act section numbers are not Code section numbers
Amendment Act section numbers are not Code section numbers, and mixing the two causes real errors. The Amendment Act has its own sections numbered 1 to 72, and commencement notifications refer to those numbers, not to sections of the Code.
So Section 40 of the Amendment Act inserts Chapter IV-A into the Code. When a notification says Section 40 has not commenced, it is not talking about Section 40 of the Insolvency and Bankruptcy Code, 2016, which dealt with a liquidator’s decision on a claim (a provision this same Act has now omitted). Commentary that mixes the two numbering systems produces confident statements about the wrong provision.
Throughout this article, section numbers refer to the Code unless the Amendment Act is named expressly.
Insolvency and Bankruptcy Code (Amendment) Act, 2026
Two halves of one Act
In force from 26 May 2026
- ✓Mandatory admission within 14 days, Sections 7, 9 and 10
- ✓Information utility record sufficient to prove default
- ✓Withdrawal barred pre-committee and post-plan-invitation, Section 12A
- ✓Avoidance window re-anchored to the initiation date
- ✓Creditor may apply directly where the professional does not, Section 47
- ✓Committee supervises liquidation, Section 21(11)
- ✓Committee may replace the liquidator at 66 percent, Section 34A
- ✓Security interest by operation of law excluded, Section 3(31)
- ✓Resolution professional barred as liquidator, Section 34(4)
- ✓Penalty ceiling doubled, appeal to the NCLAT, Section 220
Enacted, not notified
- ―Creditor-initiated process, Chapter IV-A, Sections 58A to 58K
- ―Group insolvency, Chapter V-A, Section 59A
- ―Electronic portal, Section 240B
- ―Cross-border insolvency, Section 240C
- ―Bar on affected debtors filing, Section 11(ba)
- ―Penalty for fraudulent creditor-initiated filing, Section 65(3)
- ―Offence extended to the creditor-initiated process, Section 67A
- ―Professional’s duty to act in that process, Section 208(1)(cb)
Source: MCA notification S.O. 2625(E) dated 22 May 2026, read with the Gazette text of Act No. 6 of 2026.
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Must the NCLT now admit an insolvency application within 14 days?
The Adjudicating Authority must now admit or reject an application under Sections 7, 9 and 10 within fourteen days, and on a financial creditor’s petition admission is mandatory once default is established. That is the single largest practical change in the Act for a financial creditor. Section 7(5) has been substituted in full.
The Adjudicating Authority shall, within fourteen days, admit the application if it is satisfied that a default has occurred, the application is complete, and no disciplinary proceeding is pending against the proposed resolution professional. If it proposes to reject, it must first give the applicant notice to rectify the defect within seven days. If it passes no order within fourteen days, it must record the reasons for the delay in writing.
Two Explanations do the real work. Explanation I provides that where the requirements are met, no other ground shall be considered to reject an application. Explanation II provides that a record of default furnished by a financial institution to an information utility shall be considered sufficient to ascertain default.
Describing this as a change from “may” to “shall” is close but not accurate. The pre-amendment Section 7(5)(a) already read “may, by order, admit”. What the Act does is substitute the whole sub-section and add Explanation I, and it is Explanation I that closes off the discretion.
What changed for operational creditors under Section 9?
Operational creditors get the fourteen-day discipline but not the closed list of grounds. Section 9(5) gains a new proviso requiring an order within fourteen days, failing which reasons must be recorded. There is no equivalent of Explanation I in Section 9, so analyses describing the “no other ground” bar as applying to operational creditor applications are reading across a provision that is not there.
Two other changes cut in the opposite direction. Section 215(3) previously said an operational creditor “may” submit financial information to an information utility. It now says an operational creditor “shall, before filing an application under section 9” do so, which converts an option into a precondition.
Section 67C is new, and it carries a penalty of not less than one lakh rupees and up to two crore rupees on an operational creditor who conceals a pre-existing dispute or a full and final payment in a Section 9 application. The penalty extends to anyone who authorises or acts on that concealment. Read together, the message to an operational creditor is that the door opens faster but the cost of pushing a weak petition through it has gone up sharply.
Which judgment does mandatory admission overturn?
Mandatory admission overturns one judgment. In Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352, the Supreme Court held that “may” in Section 7(5)(a) was genuinely discretionary, and that the tribunal could decline to admit, or keep admission in abeyance, even where debt and default were proved, by weighing the debtor’s overall financial position.
That reading displaced the earlier position in Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, where the Court had held that once the tribunal is satisfied that a default has occurred, it must admit, and the debtor cannot resist on grounds going beyond the existence of the default. The 2026 Act restores that position by writing it into the statute rather than leaving it to interpretation.
One case survives, and readers frequently assume otherwise. Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353 held that a Section 9 application must be rejected where a plausible pre-existing dispute exists, though the tribunal may not conduct a mini-trial on its merits. Mandatory admission does not touch that filter, because a genuine pre-existing dispute goes to whether an operational debt is due at all, not to whether the tribunal has discretion.
Section 10 changed too. Section 10(3)(b) is omitted, the conditions in Section 10(4) about disciplinary proceedings are removed, and a new Section 16(3A) requires the Adjudicating Authority to refer the matter to the Board for a recommendation on who should act as interim resolution professional. A corporate debtor filing against itself no longer chooses its own professional.
Will the NCLT actually meet the 14-day deadline?
The tribunal has not been meeting the fourteen-day deadline it already had, so whether it holds now turns on capacity rather than drafting. The deadline is not new, and that is the difficulty. What is new is that a tribunal missing it must record reasons in writing, which converts a silent delay into a documented one.
The capacity position gives some sense of the gap. The Economic Survey 2025-26 put roughly 30,600 matters pending before the National Company Law Tribunal as on March 2025, with about 30 benches sitting across insolvency and company law work. In April 2026, weeks after assent, the Supreme Court took suo motu cognisance of delays in approving resolution plans and called for nationwide data.
What came back was 383 applications for approval of resolution plans pending, with delays running from 48 days to 738 days, and some matters continuing for almost four years, against 63 sanctioned member positions of which 54 were filled. The bench described the situation as grim and dismal, and said the issues needed to be addressed on a war footing. Parliament has legislated deadlines onto a tribunal that has not been meeting the deadlines it already had.
How did the 2026 amendment change withdrawal and avoidance transactions?
The 2026 amendment narrowed both: withdrawal is now barred outright at two defined stages, and the avoidance window has been re-anchored to the initiation date. Both were routes creditors used tactically, which is why the Act reshapes creditor strategy most sharply here. Section 12A has been substituted in full, and the avoidance provisions have been re-anchored.
When can an admitted application be withdrawn under Section 12A?
An admitted application can be withdrawn only after the committee of creditors is constituted and before the first invitation for resolution plans is issued. The threshold itself has not changed. Section 12A(1) still requires an application by the resolution professional with the approval of ninety percent of the voting share of the committee of creditors. Commentary suggesting the 2026 Act altered that percentage is incorrect.
What is new is Section 12A(2), which provides that notwithstanding anything in any other law, an admitted application shall not be withdrawn before the constitution of the committee of creditors under Section 21(1), and shall not be withdrawn after the first invitation for submission of resolution plans has been issued. Section 12A(3) requires the Adjudicating Authority to pass an order within thirty days, failing which it records reasons.
Those two bars matter more than any threshold. The pre-committee window was the one creditors and debtors used most, because a settlement reached in the first few weeks avoided the cost and stigma of a full process, and the tribunal had been permitting withdrawal at that stage through the rules rather than the Code. That route is now closed by statute.
The position in Vallal RCK v. Siva Industries and Holdings Ltd., (2022) 9 SCC 803, that a committee decision to withdraw at the requisite majority is a commercial decision the tribunal cannot sit in appeal over, survives inside the permitted window. It no longer helps outside it. Creditor supremacy over withdrawal is real between the two bars and absent on either side of them.
Did the avoidance look-back period go from one year to two?
No. The durations did not change, and this is the point on which the most widely read analysis of the Act is wrong. Getting it right changes what a resolution professional actually has to examine.
Several published summaries state that the look-back period for avoidance transactions was extended from one year to two years. The Gazette text does not support that. Section 43(4) retains its two distinct periods: two years for a related party, and one year for anyone else. Section 46 and Section 50 similarly retain their existing durations.
What the Act changes is the anchor and the end-point. Sections 26, 27 and 30 of the Amendment Act substitute the phrase so that the window now runs from the stated period preceding the initiation date and ending on the insolvency commencement date, rather than simply preceding the insolvency commencement date. The initiation date is when the application was filed. The insolvency commencement date is when it was admitted.
Read that against the new proviso to Section 5(11), which provides that where multiple applications are pending against the same corporate debtor, the initiation date is the date on which the first of them was made. The reachable window now covers the entire gap between filing and admission, which on current tribunal timelines is frequently the most abuse-prone stretch of a distressed company’s life.
So the duration did not double. The window moved backwards and stretched forward, and in a contested case with sequential petitions it can now reach considerably further than it did. That is a larger practical change than the one the commentary reports, and it applies from 26 May 2026.
The Act also supplies definitions the Code previously lacked. Section 5(2A) defines an avoidance transaction as a transaction under Sections 43, 45, 49 or 50, and Section 5(9A) defines fraudulent or wrongful trading by reference to Section 66. This gives statutory form to the classification exercise the Supreme Court required in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. v. Axis Bank Ltd., (2020) 8 SCC 401, where it laid down the twin test for preferential transactions and held that a resolution professional must analyse each transaction separately under the applicable provision rather than filing a composite application.
Avoidance proceedings now survive approval of the resolution plan
Avoidance proceedings now survive approval of the plan, because Section 26 of the Code has been substituted and the new version settles a question that had produced conflicting orders for years. Filing an avoidance application, a Section 66 application or a Section 47 application does not affect the resolution process or the liquidation.
More importantly, the completion of the resolution process or the liquidation process shall not affect the continuation of those proceedings. An avoidance application no longer dies when the plan is approved.
For a creditor, that changes what an avoidance recovery is worth, because it is no longer a race against plan approval. For a resolution applicant, it changes how a distressed target is priced, because a pending avoidance claim now survives into the post-approval company with an uncertain outcome attached to it.
Can a creditor file an avoidance application if the resolution professional does not?
A creditor can now apply directly. Section 47 has been substituted, and it gives creditors that route for the first time. Where a preferential transaction under Section 43, an undervalued transaction under Section 45, an extortionate credit transaction under Section 50, or fraudulent or wrongful trading under Section 66 has occurred, and the resolution professional or liquidator has not reported it, a creditor acting alone or jointly, a member, or a partner may apply directly to the Adjudicating Authority.
Section 47(2) provides that the Adjudicating Authority shall pass orders as if the application had been filed by the liquidator or resolution professional. The creditor is not asking for permission to litigate on the estate’s behalf, and the relief available is the same relief.
Section 47(3) carries the consequence. If the Adjudicating Authority is satisfied that the resolution professional or liquidator had sufficient information or opportunity and did not report the transaction, it shall pass an order requiring the Board to initiate disciplinary proceedings against them. The word is “shall”, and there is no discretion once the finding is made.
Committee of creditors voting, after the 2026 amendment
Every threshold, with its section
51%by value
- Section 58B(2)Initiating a creditor-initiated process, by value of eligible financial creditorsNot in force
- Section 58GApplying for a moratorium before the committee is constitutedNot in force
- Sections 54A(2)(e), 54A(3)Pre-packaged process, reduced from 66 percent by this ActIn force
66%voting share
- Section 30(4)Approving a resolution plan, now with reasons recordedIn force
- Section 31Staged approval: implementation first, distribution within 30 daysIn force
- Section 33(1A)Restoring the resolution process for up to 120 days, once onlyIn force
- Section 34A(1)Replacing the liquidatorIn force
- Section 52(2) provisoRealising security where several creditors hold charge over one assetIn force
- Section 58DExtending a creditor-initiated process by up to 45 daysNot in force
90%voting share
- Section 12A(1)Withdrawing an admitted application. The threshold was not changed by the 2026 ActIn force
- Section 58-IWithdrawing a creditor-initiated processNot in force
Source: Gazette text of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Act No. 6 of 2026). Each threshold checked against its section.
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Where do secured creditors and government dues now rank under Section 53?
Secured creditors now rank ahead of government departments claiming a statutory charge, which is where they gain most under the amended Section 53. Two changes do most of the work, and they operate together.
The first is a new Explanation to Section 3(31). A security interest now means one created by an act of two or more parties, and shall not include a security interest created merely by operation of any law. The second is a new Explanation to Section 53(1)(e)(i), under which government dues, whether secured by act of parties or merely by operation of law, rank at that clause only in respect of the two years preceding the liquidation commencement date, with any remaining government dues dropping to clause (f).
Together these reverse State Tax Officer (1) v. Rainbow Papers Ltd., (2023) 9 SCC 545, where the Supreme Court held that a statutory first charge for state tax dues fell within the Section 3(31) definition of security interest, making the tax department a secured creditor. The Court reasoned that the definition did not exclude interests arising by operation of law. The 2026 Act writes in exactly that exclusion.
It also settles a conflict within the case law itself. In Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. (2023), a later bench confined Rainbow Papers to its facts and ranked government dues under Section 53(1)(e). Parliament has now codified the later position, which removes the argument rather than resolving it judicially.
Secured only to the extent of the security relinquished
A creditor is secured only to the extent of the security it relinquishes, and unsecured for the balance. A separate Explanation to Section 53(1)(b)(ii) changes how much of a secured creditor’s claim actually sits at the top of the waterfall. Where the value of the security relinquished is less than the total debt owed, the creditor is a secured creditor only to the extent of the value of that security, and an unsecured creditor for the balance.
Before this, a creditor whose security covered a fraction of its debt could argue for treatment of the entire admitted claim at the Section 53(1)(b) rank, alongside workmen’s dues. That argument is gone.
Section 53(2) now carries two Illustrations on subordination agreements. A contract subordinating workmen to a secured creditor shall be disregarded. A contract subordinating one secured creditor to another shall not be disregarded, which preserves inter-creditor arrangements between lenders while refusing to let them displace workmen.
What happens if a secured creditor misses the 14-day notification?
The security interest is deemed relinquished to the liquidation estate. Section 52 now carries that deadline with a severe consequence attached. A secured creditor must inform the liquidator of its security interest and identify the secured asset within fourteen days of the liquidation commencement date, failing which the security interest is deemed to be relinquished to the liquidation estate.
A new proviso deals with competing security over the same asset. Where more than one secured creditor holds a security interest in the same asset, none may realise it unless secured creditors representing not less than sixty-six percent of the value of all claims secured by those interests agree.
Section 52(8) provides that resolution process costs and liquidation costs under Section 53(1)(a), and workmen’s dues under Section 53(1)(b)(i), are deducted from the realisation proceeds and transferred to the liquidator. An Explanation confirms that the new Section 52(2) does not apply to liquidations initiated on or before commencement, so a secured creditor in an existing liquidation is not caught by the fourteen-day rule retrospectively.
What must a dissenting financial creditor be paid?
A dissenting financial creditor must be paid a statutory floor fixed by Section 30(2)(ba). It must receive not less than the lower of the amount it would have received under Section 53 in a liquidation, or the amount it would receive if the proceeds of the resolution plan were distributed in the order of priority in Section 53(1).
Explanation I deems payment on that basis to be fair and equitable. Explanation II grandfathers processes where, on or before commencement, the committee had already approved a plan, a liquidation order had been passed, or the committee had approved intimation to liquidate.
Three questions in this area remain genuinely unsettled, and the amendment does not answer them. Whether a creditor’s secured status under Section 53 is measured by the value of its security interest or by its entire admitted debt now has a partial statutory answer for relinquished security, but not for every configuration. Whether inter se arrangements among creditors holding pari passu charges survive inside the Section 53 waterfall is untouched. And whether the Section 30(2)(ba) minimum entitles a dissenter to the value of its security or only to a pro rata share of resolution proceeds is a question the drafting leaves open.
What powers does the committee of creditors gain under the IBC Amendment Act 2026?
The committee of creditors gains powers under the IBC Amendment Act 2026 that extend past plan approval and into liquidation, which is the clearest expansion of creditor control in the Act. Section 21(11) is new.
Where liquidation is initiated under Chapter III, the committee shall also supervise the conduct of the liquidation process by the liquidator, and Sections 21 and 24 apply to that liquidation. A proviso allows the Board to specify other classes of creditors who may attend those meetings without voting rights.
The transition rule is spelt out rather than left to argument. The Explanation provides that Section 21(11), Section 34A and Section 35(2) apply to liquidations initiated after commencement and also to ongoing liquidations where the liquidator has not yet applied under Section 54, in which case the committee continues for the remainder of the process.
Can the committee of creditors replace the liquidator?
The committee can replace the liquidator under the new Section 34A. The threshold is not less than sixty-six percent of the voting share, with written consent from the proposed replacement, and the Adjudicating Authority shall make the replacement if no disciplinary proceedings are pending against the nominee.
A correction is needed here, because the figure is carried wrongly by one of the highest-ranking published analyses of this Act. That analysis states the committee may replace the liquidator by a fifty-one percent vote. The Gazette text of Section 34A(1) says not less than sixty-six percent.
The distinction is not academic. A fifty-one percent threshold would let a single large lender replace a liquidator; sixty-six percent requires a coalition.
Must the committee record reasons for approving a resolution plan?
The committee must now record reasons for approving a resolution plan, under Section 30(4). That does not make the commercial decision reviewable on merits, and the principle in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531 that the committee’s commercial wisdom is non-justiciable remains intact.
What changes is that the decision must now be a reasoned one on the record. A committee that approves a plan without articulating why creates a document that can be examined for whether it addressed the relevant considerations at all, which is a different question from whether it decided correctly.
Section 196(1)(sa) is also new, and it empowers the Board to specify standards of conduct for the committee of creditors and its members, including timelines within which the committee shall take decisions. The power is in force. No standards of conduct have yet been specified under that clause, so committee members are presently subject to an enabling provision without content, alongside the Board’s non-binding 2024 guidelines for committees of creditors.
Section 22(3)(a) removes a bottleneck. Where the committee resolves to appoint a resolution professional, that person is deemed appointed from the date of the resolution, and the decision is communicated to the interim resolution professional, the corporate debtor and the Board. It no longer waits on the Adjudicating Authority.
Can a resolution process be restored before a liquidation order?
A resolution process can be restored once, for up to 120 days, under the new Section 33(1A). Before passing a liquidation order, the Adjudicating Authority shall consider an application by the committee, approved by not less than sixty-six percent, to restore the corporate insolvency resolution process for a period of up to 120 days, either afresh or from the stage of inviting resolution plans.
Section 33(1B) permits restoration once only. The Explanation extends the provision to processes commenced before the amendment where no liquidation order has yet been passed, which makes it immediately useful.
Section 31 adds a staged approval route. On an application by the resolution professional with sixty-six percent committee approval, the Adjudicating Authority may first approve implementation of the plan and then approve the manner of distribution within thirty days. Inter-creditor fights over distribution no longer have to hold up the plan itself.
The provisions on finality respond to a specific sequence of events. In Ebix Singapore Pte. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2022) 2 SCC 401, the Supreme Court held that a successful resolution applicant cannot withdraw or modify its plan after committee approval, because the Code contains no residual equitable power to allow it. In Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC 621, the Court first set aside a fully implemented plan and ordered liquidation in May 2025, recalled that judgment in July, and upheld the plan in September 2025. That litigation is two judgments and a recall order, not a single ruling, and treating it as one produces a wrong account of where the law landed.
Sections 31(5) and 31(6) now protect a plan after approval. Licences, permits, registrations, quotas, concessions and clearances shall not be suspended or terminated where obligations are met, and prior claims against the corporate debtor are extinguished. Explanation I preserves claims against promoters, management, guarantors and jointly liable persons, and Explanation III makes these sub-sections retrospective to the commencement of the Code except where matters have attained finality.
Operational creditors attend, but still do not vote
Operational creditors still do not vote. The Act leaves the composition of the committee and the Section 53 ranking of operational debt untouched, and the constitutional basis for that exclusion in Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17 is undisturbed.
Regulation level is where they gained something. The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2026, notified on 8 June 2026 and effective from 9 June 2026, insert Regulation 16E. Where creditors other than a scheduled bank or a public financial institution hold more than sixty-six percent of the voting share in the committee, the resolution professional must invite the five largest unrelated operational creditors by value of admitted claims, which shall include the three largest authorities to whom statutory dues are owed, to attend committee meetings as observers with no voting rights, and must record their observations in the minutes.
Attendance is not a vote, and the distinction between hearing operational creditors and letting them decide is deliberate. The question of whether small creditors lose out in practice is examined in more detail in this analysis of small creditors in insolvency cases.
What does the IBC Amendment Act 2026 change for resolution professionals?
The IBC Amendment Act 2026 changes the resolution professional’s role in four directions at once: appointment becomes more automatic, claim handling becomes an adjudicative duty, avoidance filing becomes mandatory, and personal exposure rises with no matching protection. Each of these is in force.
Who appoints the interim resolution professional now?
On a Section 7 application the financial creditor’s own nominee is appointed, and on a Section 10 application the Board recommends the appointee. Section 16(2) has been substituted so that the resolution professional proposed by the financial creditor shall be appointed as interim resolution professional if no disciplinary proceeding is pending against them. The Adjudicating Authority has no discretion to appoint someone else.
The corollary appears in Section 7(5) itself. A pending disciplinary proceeding against the proposed professional is now an express ground of rejection, and given Explanation I, it is the only ground beyond default and completeness. A creditor proposing a professional with a live proceeding against them risks the petition, not just the appointment.
Section 16(3A) runs the other way for debtor-initiated cases. On a Section 10 application, the Adjudicating Authority shall refer the matter to the Board for a recommendation, which means a corporate debtor filing against itself no longer nominates the professional who will take control of it.
Must the resolution professional value claims, not just collate them?
The professional must now verify claims and, where required, determine their value. Section 18(b) has been amended, and the new Explanation resolves a dispute that has run since the Code commenced. While collating claims, the interim resolution professional shall verify them, and, if required, determine the value of such verified claims.
The old language spoke of collating claims, and professionals argued for years about whether collation implied adjudication or merely compilation. It now expressly implies both. A professional who records a claim at the figure the creditor asserted, without applying their own mind to its value, is no longer performing the statutory function.
Sections 38 to 42, which contained the claim verification code for liquidation, have been omitted. The machinery moves to regulations through a new Section 35(1)(a) duty to maintain an updated list of claims of creditors in such manner as may be specified. An Explanation confirms that the amended Sections 35(1)(a) and 35(1)(j), and the omission of Sections 38 to 42, do not apply to liquidations initiated on or before commencement.
Can the resolution professional be appointed liquidator of the same debtor?
No. Section 34(4) is an absolute bar. An insolvency professional appointed as resolution professional for the corporate insolvency resolution process shall not be appointed or replaced as the liquidator for the liquidation of that same corporate debtor.
The mechanics follow. Section 34(1) requires the Adjudicating Authority to refer the matter to the Board for a recommendation and appoint the professional it recommends. Section 34(6) requires the Board to propose a name other than the resolution professional, with written consent, within ten days of the reference. Section 34(5) requires the outgoing professional to forward all records of the resolution process to the incoming liquidator.
For a professional currently running a process that looks likely to end in liquidation, this is an immediate planning problem rather than a future one. The fee assumption that a single appointment would run through both phases no longer holds. Records built over a resolution process now have to be handed to someone who was not present when they were built, and the continuity of pending avoidance applications sits across that handover.
The counterweight is that Section 26 keeps those applications alive independently of the process, and Section 35(1)(l) requires the liquidator to continue or institute avoidance and fraudulent trading proceedings. The applications do not lapse at the handover, but the institutional knowledge behind them can.
The cooperation duty now reaches former personnel and outside vendors
The cooperation duty now reaches former personnel and outside vendors, because Section 19 has been substantially widened. The marginal heading changes from “Personnel” to “Persons”, and the substituted Section 19(1) covers any person who is or has been personnel of the corporate debtor, a promoter, associated with its management, or engaged in a contract for service with it.
That last limb is the significant one. It reaches outsourced vendors, retained consultants and former service providers who previously sat outside the cooperation obligation and who frequently hold the records a professional needs. An Explanation confirms that references to the interim resolution professional include the resolution professional.
Section 34(3) extends the same obligation into liquidation and voluntary liquidation, and Section 54F(5) does the same for the pre-packaged process.
What happens to a resolution professional who fails to report an avoidance transaction?
The Adjudicating Authority shall direct the Board to initiate disciplinary proceedings against them. Section 25(2)(j) has been substituted to require the resolution professional to file an application to the Adjudicating Authority in respect of an avoidance transaction or fraudulent or wrongful trading, if any. Combined with Section 47(3), which mandates a disciplinary referral where a professional had sufficient information or opportunity and did not report, the duty now carries a defined personal consequence.
There is no corresponding safe harbour. The Act creates no protection for a professional who examined a transaction, formed a reasonable view that it was not avoidable, and was later found to have been wrong on a hindsight review by a creditor with the benefit of the outcome.
The practical difficulty is arithmetic rather than legal, and this is analysis rather than a reported finding. The re-anchored look-back window can reach back three or four years before a professional’s own appointment in a case where several petitions were filed sequentially and the first sat pending for months. Forensic review of that period costs money and takes time, and the Act grants neither.
Against 4,656 registered insolvency professionals, of whom only 1,983 held a valid authorisation for assignment as on 31 March 2026, the likely response to an asymmetric liability rule is defensive filing. Applications filed to discharge a duty rather than because the evidence supports them load the same tribunal the Act is trying to speed up. Practitioners who want to see how a resolution plan is actually built around findings like these will find the drafting mechanics set out in this guide to drafting a resolution plan under the IBC.
Penalties doubled, and a first appeal route to the NCLAT
Penalties double to two crore rupees and a first statutory appeal to the NCLAT arrives, on a disciplinary regime rebuilt around a new defined term. Section 3(31A) defines a service provider as an insolvency professional, an insolvency professional agency, an information utility, a registered valuer, or any other notified category registered with the Board. Sections 196, 217, 218, 219 and 220 are recast around that term, which brings registered valuers within the Board’s complaint, investigation and disciplinary jurisdiction for the first time.
Section 219 has been substituted. The Board may issue a show cause notice where, on completion of an inspection or investigation, or on the basis of material available on record, it forms a prima facie opinion that sufficient cause exists. The second limb permits a notice without any prior inspection.
Section 220 carries the sharpest changes. The Board shall constitute one or more disciplinary committees drawn from its Chairperson, whole-time members or officers not below the rank of Executive Director. After hearing, the committee may impose a penalty, suspend or cancel registration, or direct disgorgement. The maximum penalty rises from one crore rupees to two crore rupees.
Against that, Section 220(7) creates something professionals did not previously have: an appeal to the National Company Law Appellate Tribunal within thirty days, extendable by a further fifteen days for sufficient cause. This is the first express statutory appeal route from a disciplinary order of the Board.
How long does a liquidator now have to complete a liquidation?
A liquidator now has 180 days, extendable by a further ninety. Section 54 requires the liquidator to liquidate the corporate debtor completely and apply for dissolution within 180 days of the liquidation commencement date, extendable by the Adjudicating Authority by not more than ninety days. Actual completed liquidations have averaged 691 days.
Section 33(2A) requires a liquidation order within thirty days, and Section 61(6) requires the Appellate Tribunal to dispose of an appeal within three months. Section 59 caps voluntary liquidation at one year and adds a termination route through Sections 59(5A) to 59(5C), under which members may pass a special resolution and, where debt is owed, creditors representing two-thirds in value approve within seven days.
When can creditors start using CIIRP under the IBC Amendment Act 2026?
Not yet. The creditor-initiated insolvency resolution process is not in force under the IBC Amendment Act 2026, and no creditor can start one today. Chapter IV-A, comprising Sections 58A to 58K, was inserted by Section 40 of the Amendment Act, and Section 40 was not among the provisions commenced on 26 May 2026.
That is worth stating plainly because the process is the reform most coverage leads with, and several published pieces describe it as operative. It is on the statute book and it is dormant.
The design is genuinely different from the existing process, which is why it matters even in its dormant state.
How is a CIIRP meant to work?
A CIIRP is meant to run without a tribunal admission order, on a financial creditor’s approval secured twice and a public announcement. Section 58A sets eligibility. It applies to corporate debtors with assets or income or both below levels to be notified, or to a notified class of creditors or amount of debt, or to another notified category. It is barred where a Part II process is already running, or where the debtor went through a creditor-initiated or pre-packaged process, or completed a resolution process, in the preceding three years.
Section 58B governs initiation. A financial creditor belonging to a notified class of financial institutions initiates by appointing a resolution professional, after obtaining approval of eligible financial creditors holding not less than fifty-one percent in value. It must then notify the corporate debtor and allow at least thirty days for a representation, and after considering that representation, obtain a fresh fifty-one percent approval within thirty days. If the second approval lapses, the whole procedure restarts.
The process is deemed to commence on the date of the public announcement made by the resolution professional. There is no admission order, and no tribunal hearing at the start.
Section 58D sets the clock at 150 days, extendable once by up to forty-five days with committee approval at sixty-six percent. Section 58C lets the corporate debtor object within thirty days, and the Adjudicating Authority may declare the process void ab initio where no default occurred, or must convert it to a regular resolution process where default occurred but the initiation contravened the eligibility or procedure provisions.
The professional supervises, and does not take custody
The professional supervises rather than takes custody, and Section 58F is the provision that makes this a different job. Management of the corporate debtor continues to vest in its board of directors or partners. The resolution professional does not take custody or control.
Instead, the professional attends meetings of the members, the board, the committee of directors or the partners, and has the right to reject any resolution passed at those meetings, and once rejected, the resolution shall not be approved. The control is negative rather than executive.
The duties in Section 58E confirm the shape. The professional calls for claims, prepares the information memorandum, prepares a report confirming procedural compliance and that any filed plan complies with Sections 29A and 30, performs a limited subset of Section 18 and Section 25 duties, and files reports with the Board. The going-concern management duties in Sections 20, 23 and 25(1) are conspicuously absent from that list.
Section 58G removes the protection professionals are used to. The moratorium is not automatic. The professional must apply for it, with committee approval, or before the committee is constituted, with the approval of fifty-one percent in value of eligible financial creditors. It runs from the date of the application, and the Adjudicating Authority may confirm or reject it.
Directors who remain in office through such a process do not shed their ordinary obligations, and the duties of directors under Section 166 of the Companies Act, 2013 continue to apply alongside the professional’s veto.
What has to happen before the first CIIRP can be filed?
Three things have to happen before a first CIIRP filing, and they are sequential rather than parallel.
- Section 40 of the Amendment Act must be commenced by notification, along with Sections 7, 45, 47 and 60, which carry the connected bar, penalties and professional duty.
- The Central Government must notify the categories of corporate debtor eligible under Section 58A and the class of financial institutions eligible to initiate under Section 58B. Without both, the eligibility provisions have no content.
- The Insolvency and Bankruptcy Board of India must finalise the regulations. A discussion paper was issued on 15 April 2026 with a comment deadline of 28 April, later extended to 5 May 2026 across the nine papers issued that day. No final regulations have been notified.
One consequence of the sequencing deserves attention. Section 39 of the Amendment Act, which omits the existing Chapter IV fast-track resolution process, was commenced on 26 May 2026. So the fast-track route is already gone while its intended replacement is not yet available, which leaves a gap for smaller corporate debtors that neither framework currently covers.
There is also a capability question, and this is analysis rather than a sourced finding. A professional supervising a board that remains in control, holding a veto over people who resent it, without an automatic moratorium, on a 150-day clock against an actual average of 621 days, is doing work closer to that of a monitor or examiner in other jurisdictions than to the custodial role Indian professionals are examined and insured for. The Board’s authorisation syllabus and the professional agencies’ training are built for the custodial role.
A creditor considering whether to acquire a distressed business through any of these routes will still run the same diligence exercise on the target, and the legal due diligence checklist for M&A covers the ground that applies whether the acquisition happens through a resolution plan or outside one. The insolvency-specific overlay on that exercise, including the effect of the Code on a distressed target, is set out in this note on legal due diligence in M&A.
Frequently asked questions
When did the IBC Amendment Act 2026 come into force?
The Act received Presidential assent on 6 April 2026. Most of its provisions came into force on 26 May 2026 through Ministry of Corporate Affairs notification S.O. 2625(E) dated 22 May 2026. Several provisions, including the creditor-initiated process, have still not been notified.
Which provisions of the IBC Amendment Act 2026 are not yet in force?
Chapter IV-A on the creditor-initiated insolvency resolution process, Chapter V-A on group insolvency, Section 240B on the electronic portal and Section 240C on cross-border insolvency are all enacted but not commenced. Sections 11(ba) and 208(1)(cb), which connect to the creditor-initiated process, are also pending.
What happens to corporate insolvency resolution processes and liquidations that were already running?
The Act deals with this expressly rather than leaving it to argument. Section 21(11) on committee supervision applies to ongoing liquidations where the liquidator has not yet applied under Section 54. The Explanation to Section 30(2)(ba) grandfathers processes where the committee had already approved a plan or intimated liquidation. Section 52(2) does not apply to liquidations initiated on or before commencement, and Section 33(1A) on restoration does apply to processes where no liquidation order has yet been passed.
What is the creditor-initiated insolvency resolution process?
It is a route under Chapter IV-A in which a financial creditor of a notified class starts the process by appointing a resolution professional and making a public announcement, without a tribunal admission order. The corporate debtor’s management stays in control, subject to the professional’s veto over board resolutions. The process runs for 150 days, extendable by forty-five. It is not yet in force.
Can the resolution professional of the resolution process be appointed as liquidator?
No. Section 34(4) contains an absolute bar on the resolution professional being appointed or replaced as liquidator for the same corporate debtor. The Board must propose a different name within ten days of the Adjudicating Authority’s reference.
Can the committee of creditors replace the liquidator, and by what majority?
Yes, under the new Section 34A, by a vote of not less than sixty-six percent of the voting share, with the written consent of the proposed replacement. Some published analysis states the threshold is fifty-one percent, which does not match the Gazette text.
Did the Act change the ninety percent threshold for withdrawal under Section 12A?
No. The threshold remains ninety percent of the voting share of the committee of creditors. What changed is that Section 12A(2) now bars withdrawal entirely before the committee is constituted and after the first invitation for resolution plans has been issued.
Did the Act extend the avoidance look-back period from one year to two years?
No, and this is a common error. Section 43(4) retains two years for related parties and one year for others. What the Act changed is the anchor: the window now runs from that period preceding the initiation date and ends on the insolvency commencement date, which extends it forward across the gap between filing and admission.
Does the committee of creditors now have to record reasons for approving a resolution plan?
Yes. Section 30(4) requires the committee to record reasons for its approval. The commercial decision itself remains non-justiciable, so this creates a documentation obligation rather than a new ground of appeal on merits.
Can a resolution process be restored before a liquidation order is passed?
Yes. Under Section 33(1A), before passing a liquidation order the Adjudicating Authority shall consider an application by the committee, approved by sixty-six percent, to restore the process for up to 120 days. Section 33(1B) allows this once only.
What minimum payment is a dissenting financial creditor entitled to?
Under Section 30(2)(ba), not less than the lower of what it would receive under Section 53 in a liquidation, or what it would receive if the plan proceeds were distributed in Section 53(1) priority. Explanation I deems that fair and equitable.
Must a secured creditor tell the liquidator about its security within fourteen days?
Yes, in liquidations initiated after commencement. Section 52 requires the secured creditor to inform the liquidator and identify the secured asset within fourteen days of the liquidation commencement date, failing which the security interest is deemed relinquished to the estate.
Do government statutory dues still rank as secured debt?
Not in the way they did after the Rainbow Papers decision. The new Explanation to Section 3(31) excludes a security interest created merely by operation of law, and the Explanation to Section 53(1)(e)(i) confines government dues at that rank to the two years preceding the liquidation commencement date, with the remainder dropping to clause (f).
Is the interim moratorium still available to a personal guarantor to a corporate debtor?
No. Sections 96(4) and 124(4) now provide that the interim moratorium does not apply where the application concerns a personal guarantor to a corporate debtor. Separately, the Explanation to Section 14(3)(b) extends the corporate debtor’s moratorium to action by a surety against the corporate debtor under a contract of guarantee.
Did the IBC Amendment Act 2026 change anything for homebuyers?
No. The Act contains no reference to allottees, real estate or homebuyers, and it does not alter their status as financial creditors or their rights in a resolution process. Separate proposals on real estate insolvency come from a Board-constituted committee that submitted its report in April 2026, and are not part of this Act.
References
Case law
- Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. v. Axis Bank Ltd., (2020) 8 SCC 401
- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531
- Ebix Singapore Pte. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2022) 2 SCC 401
- Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407
- Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC 621 (2 May 2025), recalled by order dated 31 July 2025, and 2025 INSC 1165 (26 September 2025)
- Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353
- Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. (2023)
- State Tax Officer (1) v. Rainbow Papers Ltd., (2023) 9 SCC 545
- Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17
- Vallal RCK v. Siva Industries and Holdings Ltd., (2022) 9 SCC 803
- Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352
Statutes and subordinate legislation
- The Insolvency and Bankruptcy Code, 2016. Sections cited: 3(31), 3(31A), 5(2A), 5(9A), 5(11), 7, 9, 10, 12A, 14, 16, 18, 19, 21, 22, 25, 26, 30, 31, 33, 34, 34A, 35, 43, 46, 47, 50, 52, 53, 54, 58A to 58K, 59, 61, 66, 67C, 96, 124, 196, 215, 219, 220.
- The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Act No. 6 of 2026), Gazette of India Extraordinary, Part II Section 1, dated 6 April 2026.
- Ministry of Corporate Affairs notification S.O. 2625(E) dated 22 May 2026, appointing 26 May 2026 as the commencement date for specified provisions of the Amendment Act.
- The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2026, notified 8 June 2026, effective 9 June 2026.
Data and official reports
- Insolvency and Bankruptcy Board of India, Quarterly Newsletter, January to March 2026. Data as on 31 March 2026: cumulative realisation, average process duration, registered insolvency professionals and authorisations for assignment.
- Insolvency and Bankruptcy Board of India, Discussion Paper on the IBBI (Creditor-Initiated Insolvency Resolution Process) Regulations, 2026, issued 15 April 2026.
- ICRA, “Sharp decline in IBC recoveries in 2025-26; resolution time remains stretched”, 27 May 2026. Source for the proportion of ongoing processes past 270 days.
- Economic Survey 2025-26, on pendency before the National Company Law Tribunal as on March 2025.
This article is for informational and educational purposes only and does not constitute legal advice. Readers should consult a qualified professional before acting on any provision discussed here.
