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India's IBC: A Decade On, With Resolution Milestones Ahead
India's Insolvency and Bankruptcy Code (IBC) has completed a decade, achieving significant resolution of distressed assets. However, the framework continues to evolve with ongoing amendments and structural improvements.
IBC's First Decade: Progress and Persistent Hurdles
On May 28, 2016, India's Insolvency and Bankruptcy Code (IBC) was implemented, creating a unified framework to address corporate debt and reduce bad loans, marking a significant step in the nation's financial landscape. The process for resolving insolvency under the new law began on August 2, 2017, with Hyderabad-based Syn-Energies-Dooray Automotive becoming the first company to undergo resolution. The initial timeline for this first resolution took 191 days.
Over the past decade, the IBC has facilitated the resolution of non-performing assets (NPAs) totaling USD 39.14 billion from the 12 largest defaulters, out of outstanding claims of USD 4.96 trillion. In total, 7,102 cases have been closed, with 1,419 resolution plans settled, withdrawn, or reviewed.
Despite these achievements, India's debt recovery system faced significant challenges before the IBC's introduction, leading to operational inefficiencies. The IBC's arrival aimed to streamline the process, though challenges in efficiency and timeline adherence remain. According to Vijay K Singh of S&A Law Offices, while the IBC has delivered, its implementation still requires significant improvement.
The average time for closing a Corporate Insolvency Resolution Process (CIRP) has increased from 375 days in FY20 to 744 days as of March 2026, exceeding the mandated timeline of 330 days. Delays erode asset value, particularly for admitted claims, where realization has fallen by approximately 30 percent. MS Sahoo, a former distinguished professor at National Law University, Delhi, noted that these delays lead to enormous economic costs.
Key Legislative Amendments and Operational Challenges
Since its inception, the IBC has undergone several key amendments. These include the 2016 introduction of the IBC itself, followed by the 2017 amendment to Section 29A, which aimed to prevent willful defaulters and related parties from participating in resolution processes. In 2018, home buyers were granted the status of financial creditors. The timeline for completing CIRP was extended to 330 days in 2019. In 2020, the initiation of insolvency proceedings was suspended due to pandemic-related defaults. The 2021 amendment introduced a pre-packaged insolvency framework for Micro, Small, and Medium Enterprises (MSMEs). A comprehensive overhaul is slated for 2026, targeting creditor-initiated insolvency resolution, cross-border insolvency provisions, group insolvency, and mandatory admission for financial creditors' insolvency applications.
As of February 14, 2026, the National Company Law Tribunal (NCLT) Committee reported 53 cases. The NCLT's original mandate was to deal solely with matters related to the Companies Act, but it now handles additional IBC workload without a corresponding increase in capacity. This lack of capacity contributes to delays, with inadequate judicial staffing hindering timely resolutions. Admissions with-withdrawals collectively involved an aggregate amount of USD 152.49 billion spanning 32,179 companies.
The Insolvency and Bankruptcy Board of India (IBBI) stated that the increased workload and procedural changes underscore how the Code has impacted debtor behavior. According to the Reserve Bank of India’s (RBI) report “Trends and Progress in Banking in India 2024-25”, USD 131.59 billion recovered through scheduled commercial banks involved various mechanisms, including USD 54.80 billion through the IBC route.
The Path Forward: Strengthening Institutional Capacity and Cross-Border Frameworks
The IBC's success is not solely measured by resolved cases; it also includes cases settled informally before formal admission. Parliament and the judiciary have been more instrumental in facilitating resolutions than in ensuring effective implementation, according to MS Sahoo. Poor implementation can be counterproductive.
Sonam Chandwani, managing partner at KS Legal & Associates, emphasized the need to strengthen institutional capacity and improve execution efficiency. She stated that reducing litigation-driven delays, enhancing the quality and accountability of insolvency professionals, and ensuring timely implementation of approved resolution plans are critical for the next phase of reform.
The immediate focus for IBC practitioners involves two primary areas: first, addressing operational creditors, particularly MSMEs, through reconsideration. Data for 2024-25 indicates that financial creditors realized 37 percent of their claims, while operational creditors realized 10 percent. The second area is the operationalization of individual insolvency, which involves partnerships and proprietorships, essential for entrepreneurship. While the IBC provides a framework for individual insolvency, its full implementation is still pending.
Strengthening NCLT benches by increasing capacity at the National Company Law Tribunal is crucial for addressing resolution delays. IBBI experts affirm that reinforcing the adjudicating authority’s capacity is the most urgent reform. With one president and 62 members, efforts are underway to enhance the NCLT's operational strength.
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