THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ACT, 2026 PART – VI (PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS)

Chapter IIIA of Part II of the Code provides for conduct of pre-packaged insolvency resolution process from Section 54A to 54P.  Pre-packaged insolvency resolution process may be initiated by the creditors against the corporate debtor classified as a micro, small or medium. The Act brings various amendments to this pre-packaged insolvency resolution process.

Amendment to Section 54A

Section 54A(2) provides that the pre-packaged insolvency resolution process may be initiated subject to 8 conditions prescribed in that section.  Amendments are effected for Section 54A(2) (a) and (b).  After incorporating the amendments, the said section provides as below-

• Section 54A(2)(a) - ithas not undergone pre-packaged insolvency resolution process or creditor-initiated insolvency resolution process, or CIRP, as the case may be, during the period of 3 years preceding the initiation date.
• Section 54A(2) (b) -  it is not undergoing a corporate insolvency resolution process or a creditor-initiated insolvency resolution process.

The Board introduced a new concept of insolvency resolution process called as ‘Creditor-initiated insolvency resolution process’.  The Act introduced a new Chapter -IVA containing sections 58A to 58K for this purpose.

Section 54A(2)(e) provides another condition for initiating pre-packaged insolvency resolution process - the financial creditors of the corporate debtor, not being its related parties, representing such number and such manner as may be specified, have proposed the name of the insolvency professional to be appointed as resolution professional for conducting the pre-packaged insolvency resolution process of the corporate debtor, and the financial creditors of the corporate debtor, not being its related parties, representing not less than 66.6% in value of the financial debt due to such creditors, have approved such proposal in such form as may be specified.  The amendment reduced this requirement of 66.6% to 51%.

Section 54A(3) provides that the corporate debtor shall obtain an approval from its financial creditors, not being its related parties, representing not less than 66.6% in value of the financial debt due to such creditors, for the filing of an application for initiating pre-packaged insolvency resolution process, in such form as may be specified.  The Act amended the requirement of 66.6 % to 51%.

Amendment to Section 54C

Section 54C provides that the corporate applicant shall, along with the application, furnish-

• the declaration, special resolution or resolution, as the case may be, and the approval of financial creditors for initiating pre-packaged insolvency resolution process in terms of section 54A;
• the name and written consent, in such form as may be specified, of the insolvency professional proposed to be appointed as resolution professional, as approved under clause (e) of sub-section (2) of section 54A, and his report as referred to in clause (a) of sub-section (1) of section 54B;
• a declaration regarding the existence of any transactions of the corporate debtor that may be within the scope of provisions in respect of avoidance of transactions under Chapter III or fraudulent or wrongful trading under Chapter VI, in such form as may be specified;
• information relating to books of account of the corporate debtor and such other documents relating to such period as may be specified.

The Act amended Section 54(c) in a simple manner.  The amended Section 54© provides that the corporate applicant shall, along with the application, furnish such information as may be specified.

Amendment to Section 54F

Section 54F of the Code prescribes the duties and powers of resolution professional during the pre-packaged insolvency resolution process.  Section 54F(5) requires the co-operation of the corporate debtor to the resolution professional.  The Act substituted a new section 54(F) (5) for a new section. 

The newly substituted section 54F(5) provides that any person who is or has been a personnel of the corporate debtor or its promoter or associated with the management of the corporate debtor or engaged in a contract for service with the corporate debtor, shall extend all assistance and cooperation to the resolution professional as may be required by him to perform his duties and exercise his powers, and for such purposes, the provisions of sub-sections (2) and (3) of section 19 shall, mutatis mutandis, apply in relation to the proceedings under this Chapter.

Amendment to Section 54L

Section 54L of the Code provides for the approval of resolution plan by the Adjudicating Authority.  The Act amended Section 54L(2) provides that the order of approval under sub-section (1) shall have such effect as provided under sub-sections (1), (3) , (4), (5) and (6) of section 31, which shall, mutatis mutandis apply, to the proceedings under this Chapter.

Section 54L(3) provides for the rejection of resolution plan by the Adjudicating Authority if the resolution plan does not confirm to the requirements of approval of resolution plan.  The Act inserted a proviso to the above section.  The newly inserted proviso provides that the Adjudicating Authority may, before rejecting the resolution plan, give notice to the committee of creditors to rectify any defects in the resolution plan.

Section 54L(3), after amendment, provides that the Adjudicating Authority shall pass an order terminating the pre-packaged insolvency resolution process and passing a liquidation order in respect of the corporate debtor as referred to in sub-clauses (i),  (ii), (iii), (iv) and (v)] of clause (b) of sub-section (1) of section 33.

Amendment to Section 54N

Section 54N provides for the termination of pre-packaged insolvency resolution process.  After incorporating the amendment to Section 54N(4)(a), the Adjudicating Authority has passed an order of termination of pre-packaged insolvency resolution process shall pass an order the liquidation of the corporate debtor under in sub-clauses (i),  (ii), (iii), (iv) and (v)of clause (b) of sub-section (1) of section 33.

Draft regulation

The Board, in order to bring effect of the provisions of the Act, brought forward a draft regulation for the IBBI (Pre-packaged insolvency resolution process) (Amendment) Regulations, 2026 for the comments of the stakeholders.

The said amendment substituted a new Regulation 18 for the existing one.  The newly substituted Regulation 18 provides that the applicant shall furnish the following information/documents-

• a copy of the declaration made by the majority of the directors or partners, as the case may be, in such format as notified by the Board;
• a copy of the declaration, special resolution or resolution, as the case may be, for initiating pre-packaged insolvency resolution process in terms of section 54A;
• proof of approval from financial creditors, not being related parties, representing not less than fifty-one per cent. in value of the financial debt;
• Details of insolvency professional as follows:

• the written consent of the proposed resolution professional in such format as notified by the Board;
• the report of the resolution professional referred to in clause (a) of sub-section (1) of section 54B of the Code, prepared in such format as notified by the Board.

• audited financial statements of the corporate debtor for the last 2 financial years;
• provisional financial statements for the current financial year made up to the date of the declaration by the directors or partners, as the case may be; and
• A format as notified by the Board and submitted by the authorised representatives selected for the classes of creditors, wherever applicable.

Omission of Chapter IV

The Act omitted the provisions of Chapter IV dealing with the Fast Track Corporate Insolvency Resolution Process.

• Section 55 – Fast Track Corporate Insolvency Resolution Process;
• Section 56 – Time period for completion of Fast Track Corporate Insolvency Resolution Process;
• Section 57 –Manner of initiating Fast Track Corporate Insolvency Resolution Process;
• Section 58 – Applicability of Chapter II to this chapter.