In a significant and welcome move, the Government of India approved the new Insolvency and Bankruptcy Code (Amendment) Bill, 2019. As many as seven amendments will be made to the Code to help in the resolution of stressed assets. This has been pending for many years and international consultants have recommended a fix for decades.
Most important among these amendments, is that the resolution process has to be completed within 330 days, including litigation and other judicial processes.
The amended Code will also provide greater clarity on permissible corporation restructuring plans, clarity on rights and duties of authorized representatives of voters, manner of distribution of amounts among financial and operational creditors as well as applicability of the resolution plan on all statutory authorities.
While distributing the proceeds from resolution or liquidation, the Code gives highest priority to creditors who have brought interim finance to meet costs for these processes. Next, the emphasis is on clearing dues of workmen pending for the past two years, and outstanding dues to secured creditors. Employees apart from workmen, as well as unsecured and operational creditors are placed further down the line in terms of priority.
Additionally, a crucial amendment to the Code mandates that the bankruptcy resolution, or liquidation decided under the bankruptcy framework, is binding on federal, state, and local governments to which the insolvent company owes dues.
Last updated: December 26th, 2025
