Amid global economic volatility, regulatory certainty and resilience are essential to attract investment and build successful enterprises. The Insolvency and Bankruptcy Code, 2016 (IBC) has made India a desirable investment destination. True to its objectives, the IBC is now a vital legislation, balancing creditor rights with debtor revival.
The IBC empowers financial creditors, domestic and international, and imposes credit discipline. In total, the IBC has resolved more than 1,194 cases, with creditors realising INR3.89 trillion (USD44.4 billion). The Ministry of Corporate Affairs estimates this to be more than 170% of liquidation values. According to the Reserve Bank of India’s June 2025 Financial Stability Report, non-performing accounts in the banking system fell to a historic low of 2.3%. Resolution of financial stress means more credit for businesses. Lenders, reassured by the IBC’s mechanisms, are more willing to finance ambitious ventures. Companies may thus pursue growth without the fear of unresolved distress.
Varghese Thomas
Partner
JSA Advocates & Solicitors
The IBC ecosystem also grows the private credit sector. Improved credit discipline and greater credit supply have helped to propel India up the global ease of doing business rankings. Ongoing reforms promise further gains.
Resilience depends on taking calculated risks. The IBC provides important guardrails. Sections 43 to 51 and 66, dealing with preferential, undervalued, fraudulent and extortionate transactions, empower resolution professionals to recover assets wrongfully diverted before insolvency. Directors are personally liable for the conduct of a company in its insolvency twilight. Such provisions ensure that errant management cannot manipulate distressed situations, protecting value for genuine stakeholders.
The message to entrepreneurs is clear. Bold strategies and risk-taking are encouraged; ethics and accountability are non-negotiable. By deterring abuse, the IBC makes India’s corporate landscape more transparent and trustworthy. Businesses can pursue aggressive strategies, such as mergers and high-growth leveraged investments, protected from promoter misconduct. This not only shields creditors but also encourages ethical entrepreneurship.
Soumitra Majumdar
Partner
JSA Advocates & Solicitors
A defining provision of the IBC is section 29A, which prevents wilful defaulters and errant promoters from regaining control of distressed companies. Although it is sometimes perceived as harsh, the underlying intent is to promote responsible behaviour. Transparent promoters and committed investors thrive in a fair and equitable environment in which the focus is on genuine business revival and not on opportunistic asset stripping. That more than 30,310 cases worth INR13.78 trillion have been resolved pre-admission up to December 2024 proves that the system now incentivises promoters to engage early, further strengthening resilience.
The power of the IBC is most apparent in the real estate sector, which accounts for nearly 22% of admitted cases. The 2025 amendment to the Corporate Insolvency Resolution Process Regulations enables project resolutions that allow healthy parts of a company to continue while isolating distressed ones. Protection for homebuyers, such as the exclusion of delivered units from liquidation estates and equal treatment regardless of RERA involvement, as in Vishal Chelani & Ors v Debashis Nanda, have strengthened stakeholder trust.
The IBC Amendment Bill, 2025 aligns India’s insolvency regime with global best practice. Key innovations are a creditor-initiated insolvency resolution process; a flexible, out-of-court settlement mechanism that reduces judicial burden; a group insolvency framework, enabling co-ordinated resolutions across complex corporate structures, and cross-border insolvency provisions, providing clarity and investor assurance for companies with international operations. Continuing governmental concessions through insolvencies encourage investors to commit to core sectors long-term.
The IBC has transformed India’s insolvency system from protracted uncertainty into structured opportunity. By instilling creditor confidence, deterring misconduct and facilitating revivals, it gives businesses and creditors the resilience needed to thrive in a volatile economy. The IBC is a safety net; a framework that reassures lenders; a support for innovation, and a preserver of enterprise value.
Varghese Thomas and Soumitra Majumdar are partners at JSA Advocates & Solicitors
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