Insolvency & Bankruptcy Code

Before 2016, a distressed company could be pursued under the Companies Act, the Sick Industrial Companies Act (SICA), debt recovery mechanisms and SARFAESI, each with its own forum, and cases often ran for years. The Insolvency and Bankruptcy Code brought these into a single law: the Lok Sabha passed it on 5 May 2016 and the Rajya Sabha on 11 May 2016. The Insolvency and Bankruptcy Board of India was established on 1 October 2016, and 37 corporate insolvency cases were admitted in 2016-17. The Code has since been amended several times, including in 2018, 2019, 2020 and 2021.

By the end of March 2026, 1,419 corporate insolvency cases had ended in an approved resolution plan, and creditors had realised nearly ₹4.32 lakh crore under them: 166.85% of the liquidation value and 94.56% of the fair value of those companies, by IBBI's count. Around 42% of the cases that ended with resolution plans had earlier been with the Board for Industrial and Financial Reconstruction or were defunct. In 2024-25, banks recovered more through the IBC than through SARFAESI, debt recovery tribunals or Lok Adalats, and the IBC accounted for 52.4% of recoveries through all channels.

After a default, a financial creditor, an operational creditor or the company itself can apply to the National Company Law Tribunal (NCLT); appeals lie with the National Company Law Appellate Tribunal (NCLAT). Once a case is admitted, an insolvency professional administers the company's affairs, and a Committee of Creditors made up of financial creditors evaluates resolution plans. The process was designed to finish within 180 days, extendable up to 330 days; if no plan is approved, the company goes into liquidation. A 2021 amendment added a pre-packaged insolvency resolution process for MSMEs.

Delays remain a challenge. Resolution plans approved till March 2026 took an average of 744 days from the start of the process, or 619 days after excluding time allowed by the tribunal, against the 330-day limit. The Insolvency and Bankruptcy Code (Amendment) Act, 2026, which received assent on 6 April 2026, requires the tribunal to decide applications within 14 days or record its reasons, bars withdrawal after resolution plans are invited, extends creditors' oversight into liquidation and adds a creditor-initiated process for specified debtors. On 30 June 2026, 1,865 cases were ongoing, 1,414 of them for more than 270 days.

₹4.32 lakh crore realised by creditors through approved resolution plans (till March 2026). 8,987 cases admitted, 1,419 resolution plans and 3,003 liquidations (till March 2026); 9,166 admitted and 1,484 plans by 30 June 2026. 30,000+ cases withdrawn before admission, involving nearly ₹14 lakh crore. Resolution plans approved per year: 18 (2017-18), 130 (2019-20), 257 (2023-24) and 234 (2025-26). Gross bank NPAs 11.18% (March 2018) → 2.2% (March 2025). Sources: IBBI quarterly newsletters (January–March and April–June 2026); PIB PRID 2266350 and PIB backgrounder (28 May 2026); PIB PRID 2201357 (10 Dec 2025).