IBC Bill, 2025: Cross-Border Insolvency, CIIRP, Timelines-Know What’s inside the bill
The new IBC bill has suggested many introductions and among the important is the cross border insolvency in which the government will be empowered to deal with those matters.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 restructured the enactment of the IBC in 2016. The bill, Introduced in the Lok Sabha on 12 August 2025, intends to resolve procedural delays, reduce litigation, creditor rights, and create new mechanisms to deal with group insolvencies, cross-border cases, and high-value financial distress. The Bill has been referred to a Select Committee for scrutiny.
CIRP ADMISSION NORMS
A key reform is the overhaul of CIRP admission norms, where the National Company Law Tribunal (NCLT) is now mandated not merely permitted to admit applications under Section 7 once default, completeness of application, and clean disciplinary status of the Resolution Professional (RP) are established.
Also, the NCLT can no longer reject an application on grounds beyond these parameters, and must record reasons for delay if it fails to admit or reject within 14 days. This provision aims to unclog the notoriously delayed admission stage. The Bill also clarified that information utility records constitute sufficient proof of default, closing interpretational gaps.
WITHDRAWAL FRAMEWORK
Under the new Section 12A, insolvency applications cannot be withdrawn (i) before the constitution of the Committee of Creditors (CoC) and (ii) after the first invitation for resolution plans is issued. A 90% CoC approval remains mandatory. This is a departure from the current act where withdrawals are permitted even before CoC formation, which the Bill now restricts raising questions on whether early settlements may be discouraged.
LIQUIDATION - Liquidator Must Act under CoC
In the liquidation, the bill has eliminated the traditional quasi-judicial system. The Bill empowers the CoC to supervise liquidation, appoint or replace the liquidator, and influence key decisions. This was to avoid duplication of activities between CIRP and liquidation.
Sections 38-42 (claims admission, verification, and determination) are removed entirely, and the liquidator’s authority is reduced to administrative functions. This expansion of creditor control mirrors practices in the UK, Hong Kong, and Germany.
INSERTION OF SECTION 28A
This Section allows assets of personal or corporate guarantors already taken into possession by creditors to be transferred into CIRP with CoC approval. This solves years of legal confusion and could improve recovery prospects. When guarantors themselves are under insolvency, approval of their CoC (66%) or creditors (75% in value for personal guarantors) is required.
CREDITOR INITIATED INSOLVENCY RESOLUTION PROCESS (CIIRP)
The bill has also introduced Creditor-Initiated Insolvency Resolution Process, a 150-day out-of-court mechanism available only to notified financial institutions. CIIRP allows creditors to initiate insolvency without approaching the NCLT, provided 51% of that class of creditors consent. The Management remains with the debtor but under the supervision of a Resolution Professional. CIIRP can be converted into CIRP anytime with a 66% CoC vote.
CROSS BORDER AND GROUP INSOLVENCY
With regards to cross-border and group insolvency, the Bill empowered the Central Government to frame rules without prescribing guiding principles raising concerns of excessive delegation. The proposed rules may include common benches, inter-creditor coordination, shared insolvency professionals, and joint CoCs, offering long-awaited structure to complex multi-entity insolvency cases.
TIMELINES
Timelines have been tightened. According to the new bill, NCLT must pass liquidation orders within 30 days, liquidation must conclude within 180 days (extendable by 90), and voluntary liquidation must end within one year. Also, CIRP can be restored once for a maximum of 120 days, even at the liquidation stage, if CoC so decides. These reforms aim to check value erosion during prolonged proceedings.
CRITICAL ANALYSIS
The bill discusses different areas. Also, it has been in consideration with the parliament which will be considered in the winter session. Earlier, the liquidator had quasi-judicial powers, to admit, reject, verify, and determine the value of claims (Sections 38-42). These powers are now removed, meaning that the liquidator is no longer the final authority on claims, their role becomes administrative, not adjudicatory and the Creditors no longer need to challenge claim decisions before the NCLT because the liquidator cannot “decide” claims anymore. This reduces litigation around liquidator decisions but also weakens the role’s independence. In terms of cross-border insolvency, it does not establish a thorough structure for such processes. This can be considered over-delegation. However, this cross border insolvency will have a great impact.
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