Introduction of Creditor-Initiated Insolvency Resolution Process: 

The amendment introduces a new mechanism, known as the Creditor-Initiated Insolvency Resolution Process (CIIRP), whereby certain notified classes of financial creditors may initiate the insolvency resolution process themselves without requiring court admission. Notably, Chapter IV of Part II (dealing with the “fast-track process” under Sections 55-58, which was largely underutilized) has been omitted, with CIIRP introduced under new Chapter IV-A (Sections 58A-58K).

Under Section 58B, a financial creditor belonging to such class of financial institutions as may be notified by the Central Government must first obtain approval from financial creditors representing not less than 51% in value of the debt due to such notified class. The creditor must then inform the corporate debtor of its intention to initiate CIIRP and provide at least 30 days to make representations. After considering any such representation, if the financial creditor wishes to proceed, it must again obtain 51% approval within 30 days of receipt of the representation. Only then may the resolution professional be appointed. This hybrid and partially out-of-court model is hoped to reduce the current pressure on the Adjudicating Authority and lead to faster resolution.

Per Section 58D, the CIIRP has a 150-day timeline with a possible single extension of up to 45 days (requiring CoC approval by 66% voting share). This is shorter than the regular CIRP timeline. Importantly, under Section 58F, the Board of Directors retains management control and continues running the company during this process (similar to pre-packaged insolvency). If the CIIRP fails to yield a resolution plan, the resolution plan is rejected, or there is non-cooperation by the corporate debtor, Section 58H mandates conversion to regular CIRP. The corporate debtor may also object to the commencement of CIIRP within 30 days under Section 58C—if the Adjudicating Authority finds no default occurred, it may declare the process void ab initio.

Group Insolvency and Cross-Border Insolvency:

The Bill creates two new frameworks for group and cross-border insolvency proceedings.

Section 59A empowers the Central Government to prescribe rules for group insolvency applicable where insolvency proceedings are initiated against two or more corporate debtors that form part of a group (defined as companies interconnected by control or significant ownership of 26% or more voting rights). The rules may provide for: (a) a common Bench for insolvency proceedings and transfer of pending proceedings; (b) coordination between proceedings, including between committees of creditors and insolvency professionals; (c) appointment of a common insolvency professional as coordinator; (d) formation of a committee comprising the CoCs of the group companies; and (e) making binding coordination agreements. These provisions address complex corporate structures, such as arose in the Videocon case [2019 SCC OnLine NCLT 745] and aim to reduce value erosion from piecemeal individual resolutions.

Further, the Amendment Act also creates a new enabling mechanism for cross-border insolvency for situations where a corporate debtor holds assets or has creditors across multiple jurisdictions. Under Section 240C which has been introduced by the Amendment Act of 2026, the Central Government can prescribe rules, adapt laws and even designate a special Bench for cross-border insolvency resolution. Such provisions should create greater confidence for global investors and can align Indian law with international best practices.

Admission of CIRP:

The amendment seeks to clarify the threshold for the admission of insolvency proceedings before the NCLT. It proposes that once a default and a debt are established, and if there are no disciplinary proceedings pending against the proposed Resolution Professional, the NCLT “shall” mandatorily admit the petition. This seeks to replace the current, more discretionary language that the Adjudicating Authority “may” admit the application. The amendment clarifies the uncertainty following the Supreme Court’s judgement in the Vidarbha Industries case [(2022) 8 SCC 352] and mandates that the Adjudicating Authority must necessarily admit the petition once the criteria of the existence of a debt, default and the choice of a satisfactory Resolution Professional are satisfied. It may not take any additional factors into consideration when deciding whether to admit a case.

Liquidation Process:

The Amendment Act proposes significant changes to the Liquidation Process. It creates a new mechanism that enhances creditor involvement in liquidation by allowing the Committee of Creditors (CoC) to oversee and supervise liquidation proceedings. Key decisions such as the appointment and replacement of a liquidator can now only happen with the approval of over 66% of the CoC. This overhauls the existing framework, where the liquidator would consult a Stakeholder Consultation Committee (SCC) during the process without their advice being binding on the liquidator in any way. 

Speedy Resolution and Strict Timelines:

One of the key aims of the Amendment Act of 2026 is to cut down on delays in insolvency proceedings and enable quicker resolutions. It proposes a series of strict timelines that insolvency professionals and the Adjudicating Authority must comply with:

1. Withdrawal—All withdrawal applications must be disposed of by the NCLT within 30 days of receipt of such application.
2. Liquidation Process Completion—As mentioned above, the liquidation process must now be completed within 180 days (with a possible 90-day extension). This is significantly shorter than the current period of 1 year.
3. Liquidation Orders – A liquidation order must be passed within 30 days of receipt of an application to initiate liquidation proceedings.
4. Resolution Plan – The NCLT must rule on the resolution plan within 30 days of its receipt.
5. Challenge to CIIRP initiation by Corporate Debtor – The Tribunal must rule on the challenge within 30 days of the receipt of the application.

Along with the introduction of new timeframes, the Amendment Act has also introduced Section 64A to deter frivolous litigation. The NCLT may impose a financial penalty, ranging from Rs 1 Lakh to 2 crore, on any person who initiates “frivolous or vexatious proceedings.”

Conclusion

The Amendment Act of 2026 introduces far-reaching reforms to Indian insolvency law. It closes gaps and existing loopholes in the current law through introducing creditor-initiated insolvency resolution, setting stricter time-frames and deterring frivolous or vexatious litigation. Further, the amendment takes steps to significantly modernise the current framework by introducing needed mechanisms for complex issues like group and cross-border insolvency. Overarchingly, the Amendment Act of 2026 represents a decisive shift towards a more efficient, creditor-driven and globally aligned insolvency regime in India.