VOIWORLD/Business desk
A major revamp of India’s Insolvency and Bankruptcy Code (IBC) may be on the cards ahead of the upcoming Winter Session of Parliament, which usually begins in late November. Sources indicate that the government is considering introducing the IBC (Amendment) Bill, 2025, which could mark the most comprehensive set of changes to the law since it came into effect in 2016.
The overhaul is expected to address several long-standing industry concerns that have hindered the speed and efficiency of insolvency resolutions. Among the most debated issues is Section 29A, which restricts promoters of insolvent companies and their close relatives from participating in the resolution process — even if those relatives have no business links to the defaulting entity.
Since its enactment, the IBC has been amended six times to streamline operations and close loopholes. However, industry stakeholders argue that certain provisions continue to create unnecessary hurdles. Section 29A, in particular, has drawn criticism for being overly restrictive.
The section was originally designed to prevent errant promoters from regaining control of their companies through backdoor routes. It prohibits a wide range of individuals and entities — including wilful defaulters, those barred by securities regulators, and the relatives of defaulting promoters — from bidding for bankrupt companies.
Industry experts now believe the clause needs to evolve. They argue that relatives without any financial or management connection to the promoter should be allowed to participate in the insolvency process. Legal experts also point out that family disputes often lead to insolvency cases, and barring relatives from taking part in the revival process can make resolution more difficult.
The Supreme Court has previously held that an individual should be classified as a “related party” only if there is a business relationship, not just a familial one.
If Section 29A is modified, several large business families could gain the opportunity to revive struggling group companies, said Pawan Vijay, Founder of Corporate Professionals. The Insolvency and Bankruptcy Code (IBC), enacted in 2016, provides a time-bound process for resolving cases when companies or individuals fail to repay debts. The aim is to either rescue viable businesses or liquidate them efficiently so that creditors can recover their dues.
With the government reportedly considering these key changes before the Winter Session of Parliament, stakeholders are hopeful that the next round of reforms will make the IBC more practical and business-friendly — while still protecting creditor interests.
If implemented, the IBC (Amendment) Bill, 2025 could represent the most significant evolution of India’s insolvency framework yet, aligning it more closely with global best practices and strengthening India’s position as an attractive destination for investors and entrepreneurs alike.
