THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ACT, 2026 - PART – I

The Central Government made amendments to the Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) through the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘Act’ for short) bringing various amendments to the Code and various reforms in the Code and also strict timelines in the processes under the Code. The said Act was notified vide Notification No. 06 of 2026, dated 06.04.2026. The provisions of the Act do not come into effect immediately. Different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

Amendments to definitions

Section 3 and Section 5 of the Code contain various definitions that are applicable to the Code.

1. Section 3(27A) is newly inserted by the Act defining the expression ‘Registered Valuer’. The expression ‘Registered Valuer’ is defined as having the same meaning as assigned to it under Chapter XVII of the Companies Act, 2013.
2. Section 3(31) of the Code defines the expression ‘security interest’. The amendment inserted an explanation to the proviso to this section. The newly inserted explanation clarifies that the security interest shall exist only if it creates a right, title or interest or a claim to a property pursuant to an agreement or arrangement, by the act of two or more parties, and shall not include a security interest created merely by operation of any law for the time being in force.
3. A new Section 3(31A) is inserted by the Act defining the expression ‘services provider’. The expression ‘service provider’ is defined as an insolvency professional, insolvency professional agency, information utility, registered valuer and any person falling within the category of persons notified by the Central Government, for rendering services in relation to insolvency and bankruptcy processes under this Code and is registered with the Board.
4. The present Section 5(2A) is renumbered as 5(2B). Section 5(2A) is newly inserted.  The newly inserted section 5(2A) defines the expression ‘avoidance transaction’. The expression ‘avoidance transaction’ is defined as a transaction as referred to in sections 43 (preferential transactions and relevant time), 45 (Avoidance of undervalued transactions), 49 (Transactions defrauding creditors) and 50 (Extortionate credit transactions).
5. A new Section 5(9A) is inserted by the Act. The newly inserted Section 5(9A) defines the expression ‘fraudulent or wrongful trading’ as the fraudulent or wrongful trading as referred to in section 66.
6. Section 5(11) of the Act defines the expression ‘initiation date’. The amendment inserted a proviso to this section which provides that where multiple applications for initiation of the corporate insolvency resolution process in respect of a corporate debtor are pending before the Adjudicating Authority on the insolvency commencement date, the initiation date shall be the date on which the first such application was made before the Adjudicating Authority.
7. Section 5(26) of the Code provides for filing application in certain transactions or trading not to affect process. The Act amended the Explanation to this Section. After amendment the Explanation provides that  a resolution plan may include provisions for the restructuring of the corporate debtor, including by way of merger, amalgamation, demerger and sale of one or more assets of the corporate debtor through one or more plans proposed by one or more resolution applicants subject to such conditions as may be specified.
8. Section 5(28) of the Code defines the expression ‘voting share’. The Act brings amendment to this definition. After incorporation the amendment the expression ‘voting share’ is defined as the share of the voting rights of a single financial creditor in the committee of creditors which is based on the proportion of the financial debt owed to such financial creditor in relation to the financial debt owed by the corporate debtor to the members of the committee of creditors who are eligible to vote.

Initiation of corporate insolvency resolution process by financial creditor

Section 7 of the Code provides the procedure of initiation of corporate insolvency resolution process (‘CIRP’ for short). The Act brings amendments to Section 7.

1. The proviso to Section 7(4) is omitted. The omitted proviso provides that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.
2. The Act substituted a new section for the existing Section 7(5) of the Code. The newly substituted Section 7(5) provides that the Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order-

1. admit the application, if it is satisfied that a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceeding pending against the proposed resolution professional; or
2. reject the application, if it is satisfied that a default has not occurred or the application under sub-section (2) is incomplete or a disciplinary proceeding is pending against the proposed resolution professional.
3. the Adjudicating Authority shall, before rejecting the application under clause (b), give a notice to the applicant to rectify the defect in his application within seven days from the date of receipt of such notice from the Adjudicating Authority:
4. if the Adjudicating Authority has not passed an order under this sub-section within a period of fourteen days from the date of receipt of the application under sub-section (2), it shall record the reasons for such delay in writing.

The Explanation I clarified that where the requirements under clause (a) have been complied with, no other ground shall be considered to reject an application filed under this section.

The Explanation II clarified that where a record of default in respect of a financial debt owed to a financial institution recorded with the information utility has been furnished along with the application filed by such financial institution under this section, such record shall be considered sufficient for the Adjudicating Authority to ascertain the existence of default under this section.

Initiation of corporate insolvency resolution process by financial creditor

Section 9 of the Code provides the procedure for initiation of CIRP by operational creditor. The Act brings amendment in Section 9. Section 9(3)(e) of the Code provides that the operational creditor may any other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or any other information, as may be specified. The Act inserted a Provided further that if the Adjudicating Authority has not passed an order under this sub-section within a period of fourteen days from the date of receipt of application under sub-section (2), it shall record the reasons for such delay in writing.’

CIRP by Corporate applicant

Section 10 of the Code provides for CIRP by corporate applicant itself to initiate CIRP against it. Section 10(3) is amended by the Act. After amendment Section 10(3) provides the following-

1. 10(3)(a) - The corporate applicant shall, along with the application, furnish-

1. the information relating to its books of account and such other documents ⁴[and any other information, as may be specified; and
2. omitted

Section 10(4) provides that The Adjudicating Authority shall, within a period of fourteen days of the receipt of the application, by an order-

1. admit the application, if it is complete; or
2. reject the application, if it is incomplete.

The Act inserted a second proviso to this section which provides that if the Adjudicating Authority has not passed an order under this sub-section within a period of fourteen days from the date of receipt of the application under sub-section (2), it shall record the reasons for such delay in writing.