The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2026 (the “Amendment Regulations”), notified by the Insolvency and Bankruptcy Board of India (“IBBI” or the “Board”) on 8 June 2026 and published in the Gazette on 9 June 2026 through Notification No. IBBI/2026-27/GN/REG153, amending the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (the “CIRP Regulations”), can be read as a measured corrective to that tendency. Made in exercise of the Board’s powers under clauses (aa) and (t) of Section 196(1) read with Section 240 of the Code, the Amendment Regulations do not seek to alter the centrality of the CoCs or dilute the long-established doctrine of its commercial wisdom. Instead, what they do, across four discrete interventions, is regulate the process by which that judgement is formed, exercised and recorded. Each of its four operative provisions targets a distinct moment in the corporate insolvency resolution process (“CIRP”), namely, (i) who is present when the CoC deliberates, (ii) how the cost of the process is authorised as it runs, (iii) how the threshold question of continuing the business is confronted at the outset and (iv) how the ultimate choice between resolution plans is justified. Taken in that sequence, the amendments trace the arc of a resolution from the composition of the room to the recording of the final decision.

That orientation is also reinforced by a companion instrument issued by the Board within the same fortnight for the conduct of valuation under the Code, 2016, which equips the now more demanding decision-making process with a richer measure of the corporate debtor’s worth. The package reflects a coherent regulatory philosophy that the preservation and maximisation of value must be pursued through structured transparency, early decision-making, and an audit trail capable of withstanding scrutiny.

The four interventions

1. A wider room: the eighteen-creditor recalibration and the new Regulation 16E

The Fourth Amendment Regulations introduce two significant changes to the composition and functioning of the CoC, both directed towards a common objective: ensuring that the decision-making process remains independent, representative and aligned with the overarching goal of preserving and maximising enterprise value.

The first change relates to the constitution of the CoC in cases where a corporate debtor has only operational debt. Under Regulation 16, where no financial debt exists, the CoC is constituted from the eighteen largest operational creditors by value. The rationale behind prescribing eighteen creditors is to ensure that the committee remains sufficiently representative of the creditor body while remaining operationally manageable for deliberations and voting. It seeks to strike a balance between broad stakeholder representation and decision-making efficiency, preventing the committee from becoming unwieldy in cases involving a large number of operational creditors.

The Fourth Amendment refines this framework by clarifying that the committee must comprise the eighteen largest unrelated operational creditors. The amended proviso further stipulates that where fewer than eighteen unrelated operational creditors are available, the CoC shall comprise all such unrelated creditors. This seemingly minor insertion of the term “unrelated” addresses a potential loophole that could have permitted related-party operational creditors to influence the composition and functioning of a committee from which related parties are intended to remain excluded, thereby reinforcing the integrity and independence of the insolvency resolution process.

The more consequential amendment is the introduction of Regulation 16E, titled “Assistance to committee where creditors other than scheduled banks or public financial institutions hold significant voting share.” The provision applies where creditors other than scheduled banks or public financial institutions collectively hold more than sixty-six per cent of the voting share in the CoC. In such circumstances, the Resolution Professional (“RP”) is required to invite the five largest unrelated operational creditors to attend CoC meetings as observers, including, in particular, government departments and public authorities such as income tax authorities, GST authorities, customs authorities, provident fund authorities, municipal bodies and other entities entitled to recover statutory dues from the corporate debtor. This group must include the three largest statutory authorities to whom dues are owed, determined on the basis of admitted claims. While these creditors do not enjoy voting rights, they are entitled to attend meetings, and their observations, if any, must be recorded in the minutes.

The significance of Regulation 16E becomes clearer when viewed against the pre-amendment position. Previously, operational creditors could attend CoC meetings only where their aggregate dues constituted at least ten per cent of the total debt, a threshold that, in practice, excluded most operational creditors from meaningful participation. The new provision creates a targeted mechanism for inclusion in situations where voting control is concentrated in creditors that are not traditional lenders, such as asset reconstruction companies (“ARCs”) and other assignees of financial debt.

As distressed debt markets continue to mature, such entities increasingly acquire controlling positions in CoCs by purchasing debt from banks and financial institutions. By ensuring the presence of major trade creditors and statutory authorities in these circumstances, the amendment introduces an additional layer of oversight without disturbing the existing voting structure. The observer status is carefully calibrated: it preserves the primacy of the CoC while ensuring that alternative perspectives, concerns and objections are formally placed on record. This assumes particular importance because CoC minutes often constitute the principal evidentiary record before adjudicating authorities and appellate forums when reviewing the conduct of a CIRP.

That said, the provision is not without interpretational challenges. Regulation 16E requires the invitation of five unrelated operational creditors but does not clarify the position where fewer than five such creditors exist. Unlike the amendment to Regulation 16, which expressly addresses situations where the prescribed number of unrelated operational creditors is unavailable, Regulation 16E contains no corresponding clarification. A purposive interpretation would suggest that the RP should invite all available unrelated operational creditors in such circumstances, as any other approach would undermine the objective of broadening stakeholder participation and enhancing transparency in the CoC’s deliberations. Nevertheless, the absence of express language leaves room for uncertainty and may ultimately require clarification from the IBBI or development through insolvency practice and judicial interpretation.

2. Authorizing the spend as it runs: the recast Regulation 31B

Regulation 31B has been substituted in its entirety, and the amendment now transforms a general requirement of CoC approval for insolvency resolution process costs (“CIRP Costs”) into a continuous authorisation gate.

At the first CoC meeting, the RP must place all CIRP costs incurred to date, together with the reasons and justification for each, for the CoC’s approval. Thereafter, no CIRP cost may be incurred without prior CoC approval. To operationalise this, at every subsequent meeting the RP must:

• present estimated income, expenditure and cash flow for the period up to the next meeting;
• obtain approval for the costs proposed for that forthcoming period; and
• present a comparison of actual costs against the estimates previously approved.

The effect is to install a rolling, meeting-by-meeting budgeting discipline. Costs are no longer ratified after the fact in a single retrospective sweep, they are forecast, sanctioned and then reconciled, with variances surfaced for the committee to interrogate. This converts the CoC from a passive payer of bills into an active controller of the process spend.

However, the amendment leaves one practical issue unresolved. The requirement that all CIRP costs incurred after the first CoC meeting must receive prior approval may prove difficult to implement where urgent or unforeseen expenses arise between meetings. In practice, insolvency proceedings often require immediate expenditure to preserve assets, maintain critical operations, comply with statutory obligations or address emergent risks. Waiting for formal CoC approval in such circumstances may not always be commercially feasible. The regulations do not expressly provide a mechanism for dealing with these contingencies, leaving a degree of uncertainty regarding the RP’s ability to respond swiftly when circumstances demand. It is therefore likely that market practice will evolve to address this gap, potentially through mechanisms such as standing approvals, approved expenditure thresholds, contingency budgets or other pre-authorised cost heads that provide the necessary operational flexibility while preserving CoC oversight.

3. Confronting viability at the threshold: the Going Concern Assessment Report

Closely linked to the cost-control reforms, Regulation 31B introduces an entirely new clause which now also requires the RP to prepare and table a going-concern assessment report at the very first CoC meeting. The report must address:

• expected income and expenditure;
• projected cash flows;
• working capital requirements; and
• the material risks of value erosion arising from either continuing or suspending the corporate debtor’s operations.

On the strength of this report, the CoC must decide, at the outset, whether the corporate debtor’s operations should continue and, if so, for how long and to what extent (the scope and duration).

This is a genuinely substantive addition, and its significance lies less in the documentation it mandates than in the decision it forces. For the first time, the regulations require the viability of continued trading to be confronted as a discrete, evidence-based question at the very outset of the process, and they vest in the CoC an express power to resolve that the business be suspended. That express contemplation of suspension is novel, and it sits in evident tension with the surrounding statutory architecture.

The Code casts upon the RP a continuing obligation to manage the corporate debtor as a going concern during the CIRP, an obligation the Amendment Regulations leave wholly intact. How a committee resolution to suspend operations, taken on the strength of a value-erosion assessment, is to be reconciled with the RP’s undiluted statutory duty to preserve the entity as a going concern is a question the new clause does not answer and one that is likely to require working out before the adjudicating authorities.

A second, quieter ambiguity attends the temporal reach of the assessment. A going-concern analysis is, by its nature, a moving picture rather than a snapshot. Its conclusions shift as trading performance, market conditions and the prospects of resolution change. Yet Regulation 31B fixes the assessment and the consequent decision at the first meeting and is silent on whether either must be revisited as the process unfolds. The prudent course will be to treat the assessment as a continuing exercise, but the regulation neither requires nor expressly permits that, and the point would have benefited from clarification.

4. Recording of the CoC’s deliberations on resolution plans (revised Regulation 39(3)(b))

The final intervention reaches the culmination of the process – the CoC’s consideration of resolution plans. Regulation 39(3)(b), which previously required the committee to record its deliberations on the feasibility and viability of each plan, is substituted by a materially wider obligation. The CoC must now record its deliberations and rationale on three matters:

• the feasibility and viability of each resolution plan (as before);
• the realizable value likely to accrue to creditors under the plan, measured against both fair value and liquidation value; and
• the adequacy of the market discovery process, including, where applicable, whether challenge mechanisms were deployed or plans were re-invited to extract the best possible offer.

This provision is the clearest expression of the reform’s animating idea. The first limb preserves the existing requirement. The second compels the committee to measure, on the record, the recovery a plan offers against the objective benchmarks of fair value and liquidation value, and, by its express cross-reference to Regulation 35, it ties that exercise directly to the figures produced by the registered valuers, which is precisely the point at which the Board’s new valuation guidelines come to bear. The third limb obligates the committee to account for the rigour of the price-discovery process itself, asking in effect whether enough was done to extract the best available outcome before the plan was accepted.

The cumulative effect is that commercial wisdom, while still beyond appellate second-guessing on its merits, must now be evidenced by a reasoned record rather than asserted as a conclusion. Where a bare invocation of business judgement might once have closed the inquiry, the committee must now show its working.

The valuation counterpart

The amendment regulations do not stand alone. Days later, the IBBI issued a companion circular revising the guidelines for conducting valuation under the Code, a reform that speaks directly to the same realizable-value yardstick the CoC must now record under Regulation 39. The most significant innovation is the introduction of a “coordinating valuer”. Where individual registered valuers prepare asset-specific valuations, the coordinating valuer is tasked with integrating those inputs to arrive at a fair value for the corporate debtor as a whole. The guidelines direct the coordinating valuer to capture a holistic value that goes beyond a sum-of-assets figure, expressly factoring in synergistic value and intangible assets, so that the CoC can make informed decisions based on a comprehensive picture of the debtor’s worth.

The intangibles to be reckoned with are wide-ranging, extending to brand value, trademarks and copyrights, patents and proprietary technology, licences and regulatory approvals, customer relationships and contracts, distribution networks and goodwill. Beyond these identifiable intangible assets, the framework also requires the coordinating valuer to account for the additional value arising from integrated operations, market position, operational efficiencies and the corporate debtor’s future earning potential.

While the objective is undoubtedly laudable, the practical feasibility of such an exercise remains open to debate, particularly in the case of distressed businesses. Such valuations depend on assumptions regarding market conditions, operational turnaround and future cash flows, which may vary significantly across industries and bidders. Consequently, while the reforms may improve value discovery, they are unlikely to eliminate valuation disputes entirely and may instead shift the focus to the assumptions underpinning the valuation exercise.

The Board has also prescribed standardised reporting formats across asset classes – land and buildings, plant and machinery, and securities or financial assets – with the express aim of curbing the disputes that valuation assumptions have long generated before tribunals and appellate forums.

The shift is philosophical as much as technical: from a narrow, asset-centric mode of reporting towards a market-orientated assessment of enterprise value that is more faithful to the Code’s foundational ambition of reviving the corporate debtor through the best achievable resolution. It complements the board’s earlier adoption of the International Valuation Standards, the two operating in concert, with the International Valuation Standards directing valuers how to value and the new guidelines prescribing how to report and integrate those valuations into a fair value.

The reform has drawn a broadly favourable response among practitioners, tempered by a reasonable counterview that competitive bidding is itself a formidable engine of price discovery and that the market often surfaces a realistic enterprise value without the need for explicit synergy or intangible adjustments. Whether the new methodology reduces valuation disputes or merely relocates them will become apparent only as it is applied in live matters but its connection to Regulation 39(3)(b)(ii) means that the quality of the coordinating valuer’s work will now feed directly into the record the CoC is obliged to keep.

Reading the reform as a whole

Viewed individually, the four interventions are modest. Viewed together, they describe a consistent movement. Regulation 16E governs who deliberates; the recast Regulation 31B governs how the process is funded and whether the business trades; and the expanded Regulation 39(3)(b) governs how the final choice is reasoned. At each of these points the Board has declined to substitute its own judgment for the committee’s, choosing instead to discipline the conditions under which that judgment is formed and the evidence by which it must be supported. This is regulation by procedure rather than by outcome, a deliberate strategy of strengthening the CoC’s hand while simultaneously raising the standard of conduct expected of it.

For the RP, the amendment regulations translate into concrete new obligations identifying and inviting the qualifying observers where Regulation 16E is triggered, constructing and tabling the Going Concern Assessment Report at the first meeting, and operating a rolling, meeting-by-meeting regime of cost estimation, approval and reconciliation. For committees dominated by debt assignees, they import a layer of contemporaneous scrutiny that did not previously exist and a heightened burden of articulated justification. For operational and statutory creditors, they open a route to be heard, if not to vote in committees from which they would formerly have been absent, and for resolution applicants and valuers, the recalibrated valuation framework alters both the basis on which value is assessed and the record against which a plan’s adequacy will be measured.

Conclusion: A consistent direction of travel

The Fourth Amendment regulations do not diminish the primacy of the CoC rather, they seek to ensure that the exercise of commercial wisdom is accompanied by transparency, accountability and a demonstrable commitment to value maximisation. By regulating who participates in deliberations, how costs are incurred, when operational viability is assessed and how resolution decisions are justified, the IBBI has moved the insolvency framework towards a more process-driven model of governance. Whether these reforms ultimately improve resolution outcomes remains to be seen. What is clear, however, is that the focus of scrutiny is gradually shifting from the outcome of the CoC’s decisions to the quality of the process through which those decisions are made.

The reform nevertheless leaves important questions unanswered, most notably how the CoC’s newly recognised power to suspend operations is to be reconciled with the RP’s continuing statutory obligation to preserve the corporate debtor as a going concern and whether the initial going-concern assessment must be revisited as facts and commercial conditions evolve. These gaps are not so much defects as the natural consequence of incremental reform. As has often been the case under the IBC, their contours will likely be shaped through judicial interpretation and the development of insolvency practice. The ultimate impact of these amendments will therefore depend on how they are implemented by stakeholders and interpreted by adjudicating authorities in the years ahead.