Aditya Bhattachrya on the IBC Amendment Bill: Clarity on Long-Debated Issues, but Key Gaps Remain

The Select Committee’s review of the Insolvency and Bankruptcy Code (IBC) Amendment Bill marks a significant step toward addressing several long-standing ambiguities within India’s insolvency framework, according to Aditya Bhattachrya, as quoted in Business Standard.

Aditya notes that the Committee’s examination has brought “much-needed clarity” from the Ministry of Corporate Affairs (MCA) on critical and often-debated aspects of the insolvency regime. Key among these are measures aimed at strengthening the role and accountability of insolvency professionals, refining the framework governing avoidance transactions, and providing greater procedural certainty in relation to group insolvencies and fast-track processes. These changes signal a conscious effort to streamline insolvency proceedings and improve predictability for stakeholders.

The report also reflects a clear intent to curb delays that have historically plagued the insolvency process. By reinforcing statutory timelines and discouraging frivolous litigation, the proposed amendments seek to strike a careful balance between timely resolution, value maximisation, and the protection of creditor interests – an objective central to the IBC’s original design.

However, he cautions that several critical concerns remain unaddressed. Persistent ambiguity continues around the treatment of government and statutory dues vis-à-vis other creditors, an issue that has generated extensive litigation and inconsistent judicial outcomes. Further, while the report introduces enabling provisions on cross-border insolvency, it offers limited practical guidance, leaving uncertainty in cases involving multinational assets and creditors.

Additionally, the potential over-regulation of insolvency professionals raises concerns about operational efficiency, particularly if compliance burdens begin to outweigh practical flexibility. The report also stops short of tackling systemic delays arising from judicial capacity constraints, an enduring challenge that continues to affect the effectiveness of the IBC in practice.

Overall, while the Select Committee’s report represents a meaningful step toward refinement of the insolvency framework, Bhattacharya’s observations highlight the need for continued legislative and institutional reforms to ensure that the IBC delivers on its promise of timely, efficient, and value-driven resolution of corporate distress.

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