Legal Gaps In The Corporate Insolvency Resolution Process Under The Insolvency And Bankruptcy Code, 2016: A Post‐Amendment Study Of The Act
- IJLLR Journal
- Aug 4
- 2 min read
Ayushi Mishra, Shambhunath Institute of Law, Prayagraj
Sarthak Srivastava, Shambhunath Institute of Law, Prayagraj
The Insolvency and Bankruptcy Code, 2016 (IBC) introduced a time-bound, creditor-in-control Corporate Insolvency Resolution Process (CIRP) to replace India’s fragmented and slow pre-IBC insolvency framework. Experience and case laws, such as Vidarbha Industries on admission discretion and Rainbow Papers on the priority of government dues revealed serious legal and practical gaps in CIRP’s design. The IBC (Amendment) Act, 2026 responds by making admission mandatory within fourteen days on proof of default and completeness, elevating the evidentiary role of Information Utilities, creating a Creditor-Initiated Insolvency Resolution Process (CIIRP), tightening withdrawal under Section 12A, expanding the Committee of Creditors’ role in liquidation, and clarifying that government dues are not automatically secured debt.
Given these mounting tensions, this study shifts its focus toward three critical questions :
To what extent do the 2026 amendments resolve earlier doctrinal gaps in CIRP?
What new legal and policy concerns emerge from changes to admission, CIIRP, withdrawal and liquidation?
How should CIRP be further refined to remain both efficient and fair?
Methodologically, the study adopts a doctrinal and analytical approach: it examines the text of the unamended IBC and the 2026 Amendment, leading judgments, and IBBI and policy reports, supplemented by a desk-based review of aggregate data on timelines and outcomes.
The key argument is that while “IBC 2.0” restores clarity on admission and government-dues priority, it at the same time intensifies creditor dominance, sidelines operational creditors and MSMEs in CIIRP, raises due-process concerns around IU-based admission and also narrows the space for negotiated settlements.
The paper further concludes that the amendment is a step forward, but not a complete solution; some old cracks are filled but new cracks have opened. So as to truly make CIRP both fast and fair, we should tighten safeguards around data, open the new processes to weaker creditors, keep a check on Committee of Creditors (CoC) power in liquidation, and invest in the institutions that run the Code.
Keywords: Corporate Insolvency Resolution Process; Creditor-Initiated Insolvency Resolution Process; Information Utilities; Committee of Creditors.
