The Insolvency and Bankruptcy Code (Amendment) Act, 2026

What it does

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Act No. 6 of 2026) amends the Insolvency and Bankruptcy Code, 2016. It tightens the front end of the corporate insolvency resolution process, gives creditors more control at the back end, and adds new penalties. It also contains two chapters, on a creditor-initiated process and on group insolvency, that are not yet in force.

The Act received assent on 6 April 2026. Notification S.O. 2625(E) of 22 May 2026 brought a specified list of clauses into force on 26 May 2026. A reader has to read that list and not only the Act, because the clauses left out are the ones most discussed.

Who it binds

It binds financial creditors, operational creditors, corporate debtors and their promoters, committees of creditors, resolution professionals and liquidators, and the adjudicating authority. Financial creditors gain at the front end, since admission of an application under section 7 is now a fourteen-day exercise. Promoters lose the late settlement, because withdrawal under section 12A is barred after the first invitation for resolution plans. Committees of creditors gain at the back end. Operational creditors take on a new pre-filing step.

What has changed, and when

On the site's reading of the commencement notification, these are in force since 26 May 2026:

• the amended section 7, requiring the adjudicating authority to admit or reject a financial creditor's application within fourteen days of receipt;
• a substituted section 12A, permitting withdrawal with a ninety per cent vote of the committee of creditors, to be decided within thirty days;
• a new sub-section 31(2A) requiring the tribunal to rule on a resolution plan within thirty days, with sub-sections that preserve the corporate debtor's licences and permits;
• changes giving the committee a sixty-six per cent vote to seek restoration of a process and to replace a liquidator, and a supervisory role in liquidation;
• a 180-day liquidation clock in section 54 with a 90-day extension;
• a new section 64A penalty for frivolous or vexatious proceedings;
• a rewritten section 235A, raising the general penalty to up to three times the loss or gain, with a ceiling of INR 5 crore where the loss or gain cannot be quantified; and
• an amended section 215, requiring an operational creditor to file with an information utility before moving under section 9.

Not in force are the new Chapter IV-A, sections 58A to 58K, the creditor-initiated process, and Chapter VA with section 59A on group insolvency, together with the consequential cross-references. There is no mediation provision in the Act.

What turns on it in practice

The first question is which provision a pending case is under. A case admitted before 26 May 2026 and one admitted after may sit under different rules, and the Act's own commencement notification, and any savings it contains, decide the point. The site's practice area on insolvency acts for lenders, creditors and debtors in resolution, liquidation and restructuring, and meets this question in nearly every file.

The second is the effect on timing. The statutory ceiling for a resolution is 330 days under section 12(3), while the Insolvency and Bankruptcy Board's figures to 30 June 2026 show an average of 633 days to plan approval. The site's note on the amendment works through what an overrun of 303 days costs a lender, and observes that the haircut is the larger number. The Act shortens steps at the margins. It does not by itself close that gap.

The third is the creditor-initiated process. Because it is not in force, a lender cannot use it, and a plan that assumes it is assuming a notification that has not been made. For a promoter, the window to withdraw now closes at the invitation for resolution plans. The Supreme Court's decision of 24 February 2026 in Catalyst Trusteeship Ltd. v. Ecstasy Realty Pvt. Ltd. is relevant too: on that reading, a financial debt that is due and in default can be admitted even where it is disputed.

Glossary entries on this site for the committee of creditors, the corporate insolvency resolution process and the resolution plan rest on the Code as amended.