New Delhi, Apr 1 (PTI) The Opposition in the Rajya Sabha criticised the government on Wednesday for frequent amendments to the Insolvency & Bankruptcy Code, significant haircuts, alleged favouritism towards large corporate defaulters, and ongoing infrastructure issues at the NCLT, alongside increasing backlogs before the tribunal.

The Rajya Sabha was debating the Insolvency and Bankruptcy Code (Amendment) Bill, 2026. The bill has proposed 12 amendments to the Insolvency & Bankruptcy Code (IBC), which came into force in 2016.

Sukhendu Sekhar Ray, AITC, said the government has brought the insolvency law in a hurried manner to create an exit route for defaulting companies, as in the last nine years, six amendments have been made.

"Even after bringing so many amendments as of September 2025, approximately 8,659 cases were admitted by the NCLT, and only 3,865 cases have been resolved. And as per the pendency rate, according to experts, it will take 10 years if this pendency is to be cleared off," he said.

Moreover, creditors have faced an average haircut of approximately 67 to 70 per cent on their admitted claims. This means creditors, including banks, typically recover only 30 to 33 per cent of the debt owed to them.

"In some cases, it reached as high as 81 to 83 per cent," Ray said, adding that "estimates suggest that overall, nationalised banks have foregone roughly Rs 8 lakh crore through haircut alone since the inception of IBC".

Till late 2025, creditors realised approximately Rs 3.99 trillion against admitted claims worth of roughly Rs 12.31 trillion.

"This bill fails to curb massive haircuts for creditors, which is a tool to reap assets rather than truly resolve them," he said, adding that the insolvency system is also facing infrastructure bottlenecks as strict timelines, 40-day admissions, are not achievable as the NCLT and NCLAT are severely hindered by vacancies and backlogs, making the amendments impractical.

Moreover, the new creditor-initiated insolvency resolution process allows selected financial institutions to initiate insolvency without judicial oversight, which could be misused, fuel litigation, and trigger insolvencies prematurely, based solely on default rather than viability, he added.

Referring to a recent observation by Chief Justice of India Surya Kant, where he said unfortunately, the IBC platform is now being misused, Ray said assets of defaulter companies are undervalued, then "you indulge in a kind of auction", which is also a completely pre-planned game.

"Somebody from the family or the close friends comes and buys it. This is the crux of the thing. This is why this bill was introduced in 2016, and so many amendments have been preferred by the government within nine years to help the Tory capitalists and the defaulting corporates," he said.

Rajathi of DMK said the amendment will delegate more legislative functions of this Parliament and give away responsibility to the executive. Clause 67 of the amendment will empower the government to prescribe rules relating to cross-border insolvency proceedings, which is like outsourcing a parliamentary function.

She also raised the issue of the infrastructure bottleneck at the National Company Law Tribunal (NCLT).

The Economic Survey, tabled in February this year, indicated that the NCLT has more than 30,000 pending cases as of March 2025. Experts indicate that more than 10 years will be taken to address this backlog, while IBC stipulates a 330-day timeline to complete the resolution process, including litigation.

There are 7.83 crore MSMEs in India. The prepackaged insolvency resolution process for MSMEs was introduced in April 2021, and according to the data available in the public domain, only 13 MSME cases have been admitted, and five have reached the resolution stage in the last five years.

"This indicates two things. One, that there is not enough trust in the system. Two, that the system is failing the MSMEs in giving a solution," she said.

Sanjay Singh of AAP said that through the IBC, the government is granting protection to large defaulters, who have large debts. They have defaulted on money in banks, which is deposited by ordinary people.

"You don't give that money to poor people, you don't give it for their employment, you don't give it for the MSME sector. You give it to your few wealthy friends, with whom you take donations from behind and give business," Singh said, adding that "when those friends default, you bring this bill to save them".

Now, the term "hair cut has become Gardan (neck) cut".

So, altogether, this is a bill to legalise bank robberies, as out of Rs 5.44 lakh crore, the collection is only 1.60 lakh crore, and the rest has been forgiven.

Ayodhya Rama Reddy of YSRCP appreciated the good work done by the government through IBC.

He said over 30,000 cases are pending before the benches of the NCLT. There is a huge infrastructure gap which needs to be addressed.

"We also need to speed up the utilisation of the Insolvency and Bankruptcy Fund to provide temporary funding to stressed companies, protecting jobs and value during the resolution process," he said.

Muzibulla Khan of BJD said this amendment removes the fast-track insolvency resolution process, which is worrisome. This system was created specifically for small businesses, employees and non-profits, which are the backbone of our economy.

Sanjay Yadav of RJD and Chowdry Mohammad Ramzan J&KNC also participated in the discussion. Madan Rathore of the BJP highlighted the achievements of the IBC. PTI KRH KRH BAL BAL