The out-of-court settlement proposed under Insolvency and Bankruptcy Code will reduce the load on NCLT and help promoters to turn around assets without getting into prolonged legal battle.
The recently amended IBC Act has introduced various modes for out-of-court settlement including “debtor-in-possession and creditor-in-control” model with formal out-of-court.
Himanshu Dubey, Partner, S&A Law Offices, said the move is an alternative pathway for resolution of genuine business failures, with the aim of facilitating faster and more cost-effective insolvency resolution with minimal business disruption.
The criteria for Creditor-initiated Insolvency Resolution Process (CIIRP) is yet to be notified but it would be interesting to see whether defaulted promoters can avail this benefit, he said.
Ease burden on tribunal
The amendment is not a government concession of institutional weakness, but a legislative effort to reduce the burden on an already stretched tribunal system while preserving all existing remedies, he added.
The Lok Sabha recently passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, effecting a major overhaul of insolvency framework since the Code’s enactment in 2016.
The government has introduced a new framework for group and cross-border insolvency.
The much-awaited cross-border framework is a step towards aligning India with international best practices and improving the recognition of Indian insolvency proceedings in foreign jurisdictions.
Sukrit Kapoor, Partner, King Stubb & Kasiva, Advocates and Attorneys, said as the rules for group insolvency are yet to be framed it would be ideal for the drafters to ensure that the Indian insolvency regime is on a par with the global insolvency frameworks.
The cross-border and group insolvency framework success will depend on efficient implementation, stronger judicial infrastructure and effective coordination between domestic and foreign insolvency authorities, he added.
Reciprocation important
Amit Kumar Nag, Partner, AQUILAW said Indian tribunals will be better positioned to align parallel insolvency processes across jurisdictions by enabling recognition of foreign proceedings and introducing a Centre of Main Interest-based model.
The framework’s success is contingent upon effective reciprocity and cooperation from foreign courts, without which coordination may remain more aspirational than real in certain cases, he added.
The amendment also makes it mandatory for cases to be admitted in 14 days, which will have 150-day timelines for new resolution mechanisms.
Jayesh H, Co-Founder at Juris Corp, said the amended law requires time-bound orders to be passed once default is established. It also stipulates that filings previously made to Information Utilities are to be considered as establishing the default.
A lot also depends on whether the Supreme Court gives supremacy to Time Value of Money or like in the past, ends up treating the statutory stipulation as Directory and not Mandatory, he added.