Lok Sabha passes Insolvency and Bankruptcy Code (Amendment) Bill, 2025, to speed up case admission

The Lok Sabha on Monday passed a Bill to amend the Insolvency and Bankruptcy Code (IBC), which includes provisions to reduce the time taken for admission of insolvency resolution applications.

Piloting the bill in the Lok Sabha, Finance and Corporate Affairs Minister Nirmala Sitharaman said that the IBC has been a main and very crucial factor in improving the health of the country's banking sector, including recovery of non-performing assets.

Sitharaman said the amendments provide enabling provisions for group insolvency and cross-border insolvency processes.

She said a total of 12 amendments have been proposed in the Code, which has already undergone seven revisions since its enactment.

The minister stressed that the IBC has contributed to improving the credit rating of companies and that their corporate governance practices have also improved after coming out of the insolvency resolution process.

She clarified that the law was never intended to be used as a debt recovery mechanism.

Addressing concerns over delays in insolvency proceedings, Sitharaman said extensive litigation remains the primary reason for slow resolutions.

The amendment Bill proposes penalties to prevent abuse of the process and ensure timely outcomes, she added.

The Bill mandates admission of insolvency applications within 14 days once a company’s default is established, the minister said.

On August 12, 2025, the government introduced the Bill in the Lok Sabha to amend the Insolvency and Bankruptcy Code (IBC), proposing a raft of changes, including provisions to reduce the time taken for admission of insolvency resolution applications.

The Bill was referred to a select committee of the Lok Sabha, which submitted its report in December 2025.

IBC has been amended seven times so far.