Lok Sabha passes Insolvency and Bankruptcy Code amendment bill; Sitharaman highlights ₹4.11 lakh crore recovery

The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Amendment) Bill during the ongoing Parliament Budget Session, marking another step in strengthening India’s insolvency resolution framework. Finance Minister Nirmala Sitharaman responded to the discussion on the bill, which had earlier been sent back by the Select Committee for review.

During her reply, Sitharaman said the previous framework had not been fully utilised and the amendments introduce a new creditor-initiated insolvency system. She explained that the updated structure will include provisions such as out-of-court settlements, debtor-in-possession mechanisms and creditor-in-control models to streamline insolvency resolution processes.

The finance minister also informed the House that the Insolvency and Bankruptcy Code has played a significant role in resolving distressed companies. As of December 2025, a total of 1,376 companies have been resolved under the framework, enabling creditors to recover around ₹4.11 lakh crore.

The proposed amendments also include enabling provisions for group insolvency and cross-border insolvency processes. The bill introduces penalties to prevent misuse of the system and aims to address delays caused by extensive litigation, which the government identified as a major factor slowing down resolution cases.