The Ministry of Corporate Affairs (MCA) has notified May 26 as the appointed date for bringing into force 57 clauses, along with parts of four other clauses, of the Insolvency and Bankruptcy Code (Amendment) Act, 2026, marking the formal rollout of “IBC 2.0”. The operationalised provisions include creditor-led resolution mechanisms, an overhaul of the liquidation process, stricter timelines and measures aimed at reducing delays in insolvency proceedings.
The Amendment Act was notified on April 6 after Parliament passed the legislation during the Budget Session, incorporating all 11 recommendations of the Select Committee along with an additional government amendment mandating the Committee of Creditors (CoC) to formally record reasons for selecting the successful resolution applicant. While tribunals and rules already required qualitative and quantitative reasoning for such selections, the provision has now been embedded in the statute to strengthen transparency and accountability, a government official said.
Describing the notification as the official beginning of “IBC 2.0”, Surendra Raj Gang, Partner at Grant Thornton Bharat, said the 2026 amendments can broadly be divided into three categories. “First, the amendments are about speed and certainty. Second, they introduce a major structural shift through the new creditor-initiated insolvency resolution process, where debtors remain in possession while creditors remain in control, similar to frameworks followed in several foreign jurisdictions. Third, the amendments firmly place creditors in the driver’s seat while cleaning up grey areas in the law,” he said.
Revised timeline
Explaining the emphasis on timelines, Gang said the amendments make it mandatory for the NCLT to admit or reject insolvency applications within 14 days of establishing default, while recording written reasons in case of delay. The amendments also require approval of the manner of distribution within 30 days of approval of the resolution plan’s implementation. Appeals before the NCLAT are to be disposed of within three months, while liquidation proceedings will now be capped at 180 days, extendable by only 90 days. “This sends a clear message that time discipline is no longer optional,” he said.
Sonam Chandwani, Managing Partner at KS Legal and Associates, said the notification was far more significant than a routine procedural development. According to her, the government has selectively operationalised provisions dealing with creditor control, faster admission of insolvency cases, cross-border insolvency architecture, monitoring of resolution plans and stronger accountability for promoters and guarantors.
“In my view, the three most important changes are the introduction of creditor-led resolution mechanisms, the strengthening of post-resolution monitoring and accountability provisions, and the operationalisation of the cross-border insolvency framework. These changes collectively indicate that the government is attempting to transform the IBC from a litigation-heavy regime into a commercially-driven recovery and restructuring framework,” she said.
More clarity
Sourasubha Ghosh, Partner at CMS INDUSLAW, said the amendments also seek to correct the commercial impact of the Supreme Court’s ruling in State Tax Officer vs Rainbow Papers Ltd., which had treated statutory dues as secured claims, diluting the position of financial creditors. According to him, the amendment restores the primacy of the waterfall mechanism under the Code. “The secured and financial creditors will now have greater certainty of recoveries because the ambiguity created by the Rainbow Papers judgment has been removed through a clear legislative departure,” he said.
Published on May 26, 2026