From CIRP Withdrawal to Liquidation Oversight: Key Highlights of IBC Amendment Act 2026

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 has introduced major changes to India’s insolvency system. The new law has now received Presidential assent and has been published in the Official Gazette. It aims to tighten timelines, reduce procedural delays, and give creditors a larger role across different stages.

One of the most important changes relates to withdrawal of corporate insolvency resolution process proceedings under Section 12A. The amendment now clearly bars withdrawal before the Committee of Creditors is formed and also after the first invitation for resolution plans has been issued.

This is a major departure from the earlier position. Earlier, although 90 per cent approval of the Committee of Creditors was needed, courts had allowed considerable room for settlements and withdrawals at different stages. The 2026 amendment narrows that flexibility and sets firm statutory limits.

At the same time, the requirement of 90 per cent Committee of Creditors approval continues. The law also says that the Adjudicating Authority must decide withdrawal applications within 30 days. If that timeline is not followed, reasons for the delay must be recorded.

The amendment also reinforces the original objective of the Code, which was to ensure time-bound insolvency proceedings. Applications filed under Sections 7, 9 and 10 must now be admitted or rejected within 14 days. If that does not happen, the adjudicating authority must record reasons.

The law further makes it clear that once default is established and the application is otherwise complete, it cannot be rejected for unrelated or extraneous reasons. This change is likely to reduce uncertainty at the admission stage and bring greater consistency to insolvency proceedings.

Another important feature is the expansion of the role of the Committee of Creditors. Under the earlier framework, its role largely ended with the resolution process. The amendment now extends creditor supervision into the liquidation stage as well, giving the Committee of Creditors a continuing say.

The amendment also strengthens the position of dissenting financial creditors. It ensures that they receive at least the minimum amount that would have been available to them in liquidation. This gives added protection to creditors who do not support a resolution plan.

A notable addition is the provision allowing restoration of CIRP even after grounds for liquidation have arisen. The Adjudicating Authority may allow such restoration for up to 120 days, but only with approval of the Committee of Creditors.

The amendment also puts several judge-made principles directly into the statute. It confirms that avoidance proceedings and fraudulent trading actions will continue independently even after CIRP or liquidation ends. It also states that once a resolution plan is approved, all prior claims against the corporate debtor stand extinguished.

Other changes include revised definitions, stronger powers for interim resolution professionals to verify and determine claims, protection of licences and permits attached to approved resolution plans, and a new provision allowing transfer of guarantor assets during CIRP with Committee of Creditors approval. Overall, the amendment signals a stricter, more creditor-driven insolvency framework.