Intending to enhance the framework of the Code and ensure its more effective execution, the government presented the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, in the Lok Sabha on Tuesday.

The proposed amendments are designed to minimize delays, optimize value for all stakeholders, and enhance the governance of all processes governed by the code.

According to the statement of objects and reasons for the bill, “They aim to revise existing provisions to better align with the overarching goals of the Code and to introduce new provisions that adhere to global best practices for insolvency resolution.”

The bill introduces the concept of creditor-initiated insolvency resolution with an out-of-court initiation mechanism for genuine business failures to facilitate a faster and more cost-effective process. The bill also introduces provisions for group insolvency and cross-border insolvency.

“The cross-border insolvency framework seeks to lay the foundation for protecting stakeholder interests in domestic and foreign proceedings, promoting investor confidence and aligning domestic practices with international best practices,” according to the statement of objects and reasons of the bill.

The bill also introduces a penalty for initiating frivolous or vexatious proceedings before the adjudicating authority to deter persons from initiating such proceedings and delay the insolvency resolution and liquidation processes.

In another proposed amendment, the bill also includes liquidator and IRP assignments alongside RPs within the 10-assignment limit, as this will help ensure a more equitable distribution of work.