Introduction
On 26 May 2025, the Insolvency and Bankruptcy Board of India (IBBI) notified the Fourth Amendment to the Insolvency Resolution Process for Corporate Persons Regulations, 2016. These amendments aim to expedite the resolution process, promote transparency in decision-making, and encourage broader participation in distressed asset sales. Coming shortly after the Third Amendment issued earlier in May, this update reflects the IBBI’s continuous effort to fine-tune the corporate insolvency framework in line with emerging commercial and legal realities.
This blogpost outlines the key changes introduced by the Fourth Amendment, assesses their impact on stakeholders, and explains how these reforms strengthen the overall resolution ecosystem under the Insolvency and Bankruptcy Code, 2016.
Part-Wise Resolution Now Permitted
New sub-regulation 36A(1A):
The resolution professional (RP), with the approval of the Committee of Creditors (CoC), can now invite expressions of interest for resolution plans involving the corporate debtor as a whole, for the sale of one or more of its assets, or for both. This flexibility allows the resolution process to accommodate different approaches concurrently.
What this means:
The amendment facilitates targeted investor participation by allowing separate bids for distinct assets. This helps preserve value in viable segments, reduces the time required to finalize resolution, and supports more nuanced restructuring strategies.
Dissenting Creditors Get Priority in Staged Payments
Amended regulation 38(1):
If a resolution plan provides for payment in stages, dissenting financial creditors must receive payment at least on a pro rata basis and in priority to financial creditors who voted in favor of the plan at each stage.
What this means:
This change addresses the risk of unfair treatment faced by dissenting creditors when payments are spread over time. It reinforces the principle of equitable treatment and helps prevent situations where dissenters are disadvantaged due to delayed or subordinated recoveries.
Interim Finance Providers May Attend CoC Meetings as Observers
New sub-regulation 18(5):
The CoC has been granted the authority to direct the RP to invite providers of interim finance to attend CoC meetings as observers. These participants will not have voting rights but will be allowed to observe proceedings.
What this means:
Interim financiers will now have improved visibility into the debtor’s financial and operational condition. This facilitates more informed lending decisions and can increase access to much-needed interim funding during the resolution period.
Mandatory Presentation of All Resolution Plans to the CoC
Amendments to regulation 39(2) and 39(3):
RPs are now required to present all resolution plans to the CoC, including those that are non-compliant with the Code or its regulations. Previously, only compliant plans needed to be placed before the CoC.
What this means:
This ensures that the CoC has access to the full spectrum of options, including plans that may require refinement. By removing the RP’s discretion to screen out plans, the regulation enhances transparency and allows creditors to decide whether certain proposals hold commercial merit despite technical shortcomings.
Omission of Regulation 36B(6A)
Provision removed:
Sub-regulation 36B(6A) has been omitted. This provision previously dealt with specific procedural elements of plan evaluation.
What this means:
The omission likely streamlines the regulatory text and aligns with the broader intent of simplifying procedures while maintaining consistency with the revised framework. Its removal may help avoid ambiguity or duplication in interpretation and execution.
Final Thoughts
The Fourth Amendment to the CIRP Regulations demonstrates the IBBI’s commitment to building a resolution process that is efficient, transparent, and commercially viable. The ability to invite asset-wise plans, protect dissenting creditors in phased payments, improve transparency for interim finance providers, and ensure full disclosure of plans to the CoC are all steps in the right direction.
For stakeholders such as creditors, investors, resolution applicants, and insolvency professionals, these changes require operational adjustments and a re-examination of strategy. They also present an opportunity to leverage regulatory clarity to drive faster and more effective resolutions.
At Lexentra, we support financial institutions, resolution professionals, investors, and strategic buyers in navigating India’s insolvency regime. Whether you are involved in an ongoing process or exploring distressed asset opportunities, we are ready to help you understand how these regulatory developments apply to your business interests. We invite you to get in touch with us to learn more.
Disclaimer:
The content of this blog is intended for general information purposes only and does not constitute legal advice or a legal opinion. Readers should not act upon any information contained herein without seeking appropriate professional counsel. The views expressed are those of the author(s) and do not necessarily reflect the views of Lexentra or its professionals. While efforts are made to ensure accuracy, Lexentra disclaims all liability for errors or omissions and for any actions taken based on this content. For specific legal advice, please contact a qualified professional at Lexentra.
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