New IBBI Amendments: Clear Cost Approvals, Creditor Oversight, and Accountability in Resolution Plans [Read Notification]
These changes reflect the Board’s continued effort to enhance accountability and efficiency in India’s insolvency framework.
The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2026. The changes, issued under the Insolvency and Bankruptcy Code, 2016, aim to strengthen transparency, creditor participation, and oversight in corporate insolvency resolution processes (CIRP).
The amendment to Regulation 16 specifies that the committee of creditors (CoC) must include the “eighteen largest unrelated operational creditors.” If fewer than eighteen such creditors exist, all unrelated operational creditors will be included. This ensures broader representation of operational creditors in the CoC.
A new Regulation 16E has been introduced to address situations where creditors other than scheduled banks or public financial institutions hold more than 66% voting share. In such cases, the resolution professional must invite the five largest unrelated operational creditors, including three authorities with statutory dues, to attend CoC meetings as observers without voting rights. Their observations, if any, must be recorded in the minutes of the meetings.
Regulation 31B has been substituted with strict approval requirements for insolvency resolution process costs. All costs incurred up to the first CoC meeting must be placed before the committee with justification. The resolution professional is also required to prepare a Going Concern Assessment Report, detailing estimated income, expenditure, cash flows, working capital needs, and risks of value erosion.
Based on this report, the CoC will decide whether the debtor’s operations should continue, and if so, to what extent and for how long.
Also, Regulation 39(3)(b) has been revised to require the CoC to record its deliberations on the feasibility and viability of each resolution plan, the expected recovery compared to fair and liquidation values, and the adequacy of market discovery during the CIRP. This includes procedures such as challenge processes or re-invitation of plans, where applicable.
The notification, signed by IBBI Chairperson Ravi Mittal, follows closely on the heels of the Third Amendment Regulations, 2026, issued earlier this month.
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