{"id":84871,"date":"2026-09-15T18:21:52","date_gmt":"2026-09-15T12:51:52","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=84871"},"modified":"2026-09-15T18:24:12","modified_gmt":"2026-09-15T12:54:12","slug":"ibc-amendments","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/15-09-2026\/ibc-amendments","title":{"rendered":"Amendments Under Insolvency and Bankruptcy Code"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The Insolvency and Bankruptcy Board of India (IBBI)<\/strong> has proposed four key amendments to strengthen safeguards for creditors in insolvency resolution proceedings involving personal guarantors to corporate debtors.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Under the <strong>Insolvency and Bankruptcy Code, 2016 (IBC)<\/strong>, a personal guarantor who guarantees the debt of a company can be subjected to insolvency proceedings when the corporate debtor defaults.<\/li>\n\n\n\n<li>The framework seeks to <strong>balance creditor recovery, debt resolution<\/strong> and protection of the guarantor\u2019s legitimate interests.<\/li>\n\n\n\n<li>However, the rules governing personal guarantors currently provide weaker safeguards for creditors than those available under the <strong>Corporate Insolvency Resolution Process (CIRP).<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Amendments Proposed by IBBI<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Related Parties to be Barred from Voting: <\/strong>Creditors who qualify as related parties of the personal guarantor would be <strong>excluded from voting on the repayment plan.<\/strong>\n<ul class=\"wp-block-list\">\n<li>At present, the personal-guarantor framework bars an associate from voting, but the <strong>definition of an associate is narrower<\/strong> than that of a related party.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Greater Scrutiny of Avoidance Transactions: <\/strong>Resolution professionals would be required to examine whether the guarantor was involved in <strong>preferential, undervalued or extortionate credit transactions<\/strong> during the relevant period.\n<ul class=\"wp-block-list\">\n<li>Their findings would have to be placed before creditors before they vote on the repayment plan.<\/li>\n\n\n\n<li>With creditor approval, the resolution professional would also initiate appropriate legal proceedings in cases involving such transactions.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Independent Valuation of Assets:<\/strong> A registered valuer would be appointed to determine the <strong>fair value and realisable value <\/strong>of the guarantor\u2019s assets.\n<ul class=\"wp-block-list\">\n<li>The valuation report would be submitted to creditors along with the repayment plan.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Recording Reasons for Creditors\u2019 Decisions:<\/strong> Resolution professionals would be required to record the deliberations and reasons behind creditors\u2019 decisions rather than merely recording voting results.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-group has-background\" style=\"background-color:#fff2cc\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h3 class=\"wp-block-heading\"><strong>Insolvency and Bankruptcy Code (IBC) 2016<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>IBC was introduced in 2016<\/strong> to address rising Non Performing Assets and ineffective debt recovery mechanisms in India.<\/li>\n\n\n\n<li>Objectives of the IBC resolution are;\n<ul class=\"wp-block-list\">\n<li><strong>Business Revival: <\/strong>To save businesses through restructuring, changes in ownership, or mergers,<\/li>\n\n\n\n<li><strong>Maximization of Asset Value:<\/strong> To preserve and maximize the value of the debtor&#8217;s assets,<\/li>\n\n\n\n<li><strong>Promoting Entrepreneurship and Credit:<\/strong> To encourage entrepreneurship, improve credit availability, and balance the interests of stakeholders, including creditors and debtors.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Currently a maximum <strong>330 days <\/strong>is allowed to find a resolution for a company admitted into the insolvency resolution process.\n<ul class=\"wp-block-list\">\n<li>Otherwise, the company goes into<strong> liquidation.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Institutional Framework&nbsp;<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Insolvency and Bankruptcy Board of India (IBBI):<\/strong> The apex regulatory body established to oversee the functioning of insolvency professionals, insolvency professional agencies, and information utilities.<\/li>\n\n\n\n<li><strong>National Company Law Tribunal (NCLT):<\/strong> The adjudicating authority responsible for admitting insolvency petitions, declaring moratoria, and approving resolution plans for companies and LLPs.<\/li>\n\n\n\n<li><strong>Insolvency Professionals (IPs):<\/strong> IPs administer the affairs of distressed entities, safeguard assets and facilitate meetings of creditors. They oversee the resolution process in compliance with the Code and applicable regulations.<\/li>\n\n\n\n<li><strong>Committee of Creditors (CoC): <\/strong>The supreme decision-making body comprising the distressed entity&#8217;s financial creditors. They evaluate, vote on, and approve the resolution plan.<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/economy\/august-inflation-rbi-october-7-interest-rate-decision-10877629\/?ref=infinite\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> The Insolvency and Bankruptcy Board of India (IBBI) has proposed four key amendments to strengthen safeguards for creditors in insolvency resolution proceedings involving personal guarantors to corporate debtors. <\/li>\n<p><\/p>\n<p><strong> Background <\/strong><\/p>\n<li class=\"ms-5\"> Under the Insolvency and Bankruptcy Code, 2016 (IBC), a personal guarantor who guarantees the debt of a company can be subjected to insolvency proceedings when the corporate debtor defaults. <\/li>\n<li class=\"ms-5\"> The framework seeks to balance creditor recovery, debt resolution and protection of the guarantor\u2019s legitimate interests. <\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/15-09-2026\/ibc-amendments\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-84871","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/84871","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=84871"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/84871\/revisions"}],"predecessor-version":[{"id":84876,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/84871\/revisions\/84876"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=84871"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=84871"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=84871"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}