Amendment to Liquidation Regulations Streamlines Insolvency Framework: Sukrit Kapoor Comments

The Insolvency and Bankruptcy Board of India (IBBI) has introduced key amendments to the Liquidation Process Regulations, 2016, effectively abolishing the option of sale as a going concern under liquidation. The move aims to simplify procedures, enhance clarity, and strengthen the overall efficiency of the liquidation process under the Insolvency and Bankruptcy Code, 2016 (IBC).

In a recent Business Standard article, Sukrit Kapoor commented: “This amendment refines the regulatory framework governing liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC) by making changes to key provisions of the Liquidation Process Regulations, 2016. Notably, it brings in the prospective-application clause (so the amended rules apply only to cases where ‘liquidation by sale as going concern has not commenced’). On the face of it, this streamlining suggests a regulatory effort to simplify or clarify the liquidator’s powers and procedural burdens in liquidation under IBC, potentially reducing ambiguity or redundancy in the rules.

By specifying that the new rules apply only to liquidations where the ‘sale as going-concern’ has not yet commenced, the IBBI ensures that ongoing processes are not disrupted retroactively , a principle of legal certainty for creditors, existing management and liquidation professionals. Moreover, by eliminating or revising specific sub-clauses, the amendment may remove procedural obstacles or reduce the scope for discretionary interpretation that had previously caused delays or litigation. For practitioners, this signals that the IBBI is refining the regulatory regime to better align with operational realities in liquidation, which may improve speed of resolutions, reduce costs, and thereby enhance creditor recoveries in the Indian insolvency ecosystem.”

This perspective highlights the IBBI’s focus on procedural clarity, regulatory certainty, and efficiency in liquidation, which is likely to have a positive impact on creditors and insolvency professionals alike.

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