CoC must log reasons for approving resolution plan in new IBC Bill: FM
New Delhi, Mar 30, 2026
The amended IBC Bill requires the Committee of Creditors to record reasons for selecting resolution applicants, while introducing timelines for NCLAT and faster approval of plans
The amended Insolvency and Bankruptcy Code (IBC) Bill introduced an additional provision to ensure that the Committee of Creditors (CoC) records the reason for selecting the resolution applicant, Finance Minister Nirmala Sitharaman told the Lok Sabha on Monday.
“This would bring more transparency to the IBC process,” the finance minister said, stressing that IBC has played a crucial role in improving India’s banking sector as a channel for recovering NPAs for Scheduled Commercial Banks.
A CoC in IBC consists of financial creditors in insolvency cases, and can also include operational creditors with limited participation and voting rights. The Supreme Court in matters including Jet Airways liquidation and the Bhushan Steel-JSW case had raised concerns about CoC conduct and the execution of its commercial wisdom.
The Insolvency and Bankruptcy Board of India has taken important steps to increase the accountability of the CoC in the resolution process, while proposing deeper deliberations in meetings.
The IBC Bill was passed in the Lok Sabha on Monday, incorporating all 11 suggestions made by a select committee in December 2025.
Among some of the key changes incorporated in the Bill is a three-month timeline for National Company Law Appellate Tribunal (NCLAT) to dispose of the appeal. The government has proposed a 30-day timeline for approving, or rejecting the resolution plan, to address the delays in the corporate insolvency resolution process.
“IBC Bill seeks to strengthen the existing insolvency framework… IBC has helped a lot in improving valuations, enabling companies to continue as going concerns while also improving the health of the banking sector,” Sitharaman said.
She highlighted that the number of cases getting settled even before the admission stage has reached 32,179 with an underlying default of ₹14.62 lakh.
On the issue of homebuyers, Sitharaman stressed that IBC was a sector agnostic law and was invoked wherever there is stress, or claims are filed under the Code.
The Bill proposes a complete overhaul of the Code, with major reforms including group and cross-border insolvency and prepackaged insolvency for large corporations. It has brought significant reforms with the addition of a new clause that allows assets of a personal, or corporate guarantor to be transferred to lenders as part of the insolvency resolution process.
In the report tabled in Parliament on December 16, 2025, the Bharatiya Janata Party Member of Parliament (MP) Baijayant Panda-led committee suggested the introduction of a clear statutory timeline for the NCLAT, as the Amendment Bill did not have one.
The Code has undergone seven rounds of amendments since its inception in 2016.
The Bill replaces the underutilised fast-track process with a new creditor-initiated insolvency framework, featuring out-of-court initiation, a debtor-in-possession, and a creditor-in-control model, where management continues to vest in the existing Board of Directors or partners with safeguards, and defined timelines.
The new out-of-court initiation mechanism for insolvency has prescribed a 150-day timeline for faster resolution.
[The Business Standard]
