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Recently, on February 16, 2026, the Insolvency and Bankruptcy Board of India ("IBBI") released a Discussion Paper proposing targeted amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") framed under the Insolvency and Bankruptcy Code, 2016 ("IBC"/ "Code"). The proposed amendments reflect the practical challenges faced by the stakeholders under the existing framework and propose a calibrated reform effort aimed at strengthening creditor oversight, reducing procedural ambiguities and reinforcing value maximisation during the corporate insolvency resolution process ("CIRP").
The proposed amendments in CIRP Regulations focus on four critical aspects: (i) strengthening the recording of Committee of Creditor ("CoC") deliberations while approving resolution plans; (ii) rationalisation of the framework for approval of insolvency resolution process costs and structured decision making on continuation of operations of the corporate debtor as a going concern; (iii) clarification on the role of the CoC in respect of delayed claims; and (iv) exclusion of related operational creditors from participation in operational creditor only CoCs.
Collectively, these proposals aim not to dilute commercial wisdom, but to ensure that such wisdom is exercised transparently, responsibly and within a structured regulatory framework.
Proposal I- Strengthening the Recording of CoC Deliberations while Approving Resolution Plans
Under the existing framework, the CoC is required to evaluate resolution plans and record its deliberations on feasibility and viability. Valuation metrics such as fair value and liquidation value (determined under Regulation 35 of CIRP Regulations) are made available to the CoC during consideration of resolution plans. However, the regulations do not presently prescribe specific key aspects that should ordinarily form part of the recorded deliberations. As a result, the depth and quality of recording in CoC minutes may vary across CIRPs.
While judiciary has consistently upheld the primacy of the CoC's commercial wisdom, the absence of structured recording sometimes obscures the analytical basis of its decision making. The proposed amendment to Regulation 39(3) of CIRP Regulations addresses this gap by requiring the CoC to expressly record deliberations on: (i) the expected recovery for creditors in comparison with fair value and liquidation value determined under Regulation 35 of CIRP Regulations; (ii) the adequacy of market discovery, including, where applicable, the use of challenge mechanisms or re-invitation of plans; and (iii) the capability and credibility of the resolution applicant, including certainty of implementation and availability of funds.
This proposal, while fully preserving the commercial wisdom and decision making autonomy of the CoC, enhances transparency and evidentiary robustness in the CIRP process.
Proposal II- Rationalisation of the Framework for Approval of Insolvency Resolution Process Costs and Decision Making on Continuation of Operations as a Going Concern
One of the most significant proposals concerns Regulation 31B of CIRP Regulations, which deals with approval of CIRP Costs and continuation of operations. Earlier, Regulation 31B of CIRP Regulations was relatively brief and primarily mandated the Resolution Professional ("RP") to place before each meeting of the CoC the operational status of the corporate debtor and to seek approval for all costs forming part of the CIRP Costs. However, the proposed amendment significantly expands the scope of responsibility by placing an additional obligation upon the RP to prepare and submit a comprehensive Going Concern Assessment Report at the first meeting of the CoC, which is in addition to its existing role of taking control and custody of the assets of the corporate debtor, managing and supervising the day-to-day operations of the corporate debtor, collating and verifying claims, and facilitating the constitution of the CoC.
Under the current framework, the CoC is empowered to approve CIRP Costs. However, the CoC is constituted only after collation and verification of claims, typically after thirty days from the insolvency commencement date. During this interim phase, the Interim Resolution Professional ("IRP") necessarily incurs costs and expenses without CoC oversight or prior approval.
IBBI has observed that, in certain cases, continuation of operations during CIRP has been undertaken without a structured financial assessment of viability, cash flows or expected value outcomes. Such mechanical continuation of operations, without regard to commercial justification, has sometimes resulted in avoidable resource burn, escalation of CIRP costs, blockage of resources in receivables and erosion of enterprise value.
As sections 20 and 25 of the IBC obligate the IRP and RP to preserve and protect the value of the corporate debtor and to manage it as a going concern. However, in the absence of the CoC, it is critical that the RP focuses on the preservation and protection of enterprise value and does not burden the corporate debtor with excessive costs in the name of value maximisation.
Thus, the proposed amendment to Regulation 31B of CIRP Regulations are that:
- For the first thirty days (or until constitution of the CoC, whichever is earlier), CIRP Costs shall be confined to expenses necessary for preservation and protection of the assets of the corporate debtor, maintenance of essential services, statutory compliance and such minimal operations as are required to prevent value deterioration. All such initial costs must be placed before the CoC at its first meeting with proper justification;
- At the first CoC meeting, the RP must submit a Going Concern Assessment Report, which shall include: (a) estimated income, expenditure and cash flows from continuation of operations; (b) details of working capital requirements, if any; and (c) material risks of value erosion arising from continuation or suspension of operations. Based on this assessment, the CoC shall take an informed commercial decision on whether the corporate debtor should be run as a going concern and, if so, the scope, scale and duration of such operations. This decision shall form the commercial basis for incurring future operational CIRP costs;
- After the first meeting of the CoC, all CIRP Costs shall require prior CoC approval, supported by periodic financial estimates and variance statements comparing actuals with approved estimates.
The aim behind this proposed amendment is to institutionalise financial discipline. It ensures that continuation of operations is guided by commercial prudence rather than default practice. By embedding structured assessment and continuous oversight, the amendment aligns operational decisions with the Code's core objective i.e., value maximisation within a time bound resolution framework. In the current economic environment, where distressed businesses may already be suffering from liquidity stress, such discipline prevents further value leakage during CIRP.
Proposal III- Clarification of the Role of the CoC in Respect of Delayed Claims
Regulation 13(1C)(b) of CIRP Regulations currently provides that delayed claims received after the prescribed period specified under Regulation 12 of CIRP Regulations, but before voting on the resolution plan or initiation of liquidation, shall be placed before both the CoC and the Adjudicating Authority.
In practice, ambiguity has arisen regarding sequencing and scope. An interpretation has emerged in some cases that only delayed claims recommended by the CoC should be placed before the Adjudicating Authority. This interpretation conflicts with settled legal principles. The power to condone delay and adjudicate claims lies exclusively with the Adjudicating Authority and the CoC's role is confined to the commercial aspects of the resolution process.
IBBI has noted that in certain cases, delayed claims categorised as acceptable by the RP were not placed before the Adjudicating Authority solely because the CoC did not recommend the same. This has led to procedural inconsistency and avoidable disputes.
Thus, the proposed amendment clarifies that all delayed claims categorised as acceptable by the RP must be placed before the Adjudicating Authority within one week for condonation and adjudication and be placed before the CoC only for its recommendation regarding their treatment in the resolution plan, if any.
This clarification restores doctrinal coherence between the adjudicatory functions of the Adjudicating Authority and the commercial functions of the CoC. It ensures that the legal rights of claimants are not indirectly curtailed by the commercial considerations of the CoC, while preserving the CoC's autonomy in plan structuring and in determining the treatment of such claims under the resolution plan.
Proposal IV-Exclusion of 'Related' Operational Creditors from CoC
Regulation 16 of CIRP Regulations deals with constitution of the CoC in cases where the corporate debtor has no financial debt, or all financial creditors are related parties. In such situations, the CoC consists of the largest operational creditors along with representatives of workmen and employees and enjoys the same rights and powers as a CoC comprising financial creditors.
While the Code expressly excludes related financial creditors from the CoC to preserve independence of decision making, the current framework does not expressly exclude related operational creditors in operational creditor only CoCs. This creates a potential vulnerability whereby promoters or related entities may influence decision making through operational debt structures, thereby compromising the neutrality of the creditor driven process.
Thus, the proposed insertion of the term "unrelated" in Regulation 16(2)(a) of CIRP Regulations ensures that only unrelated operational creditors may constitute such CoCs. The said amendment shall enhance fairness and credibility of the process, prevent circumvention of CoC neutrality, and reinforce the principle that resolution must remain creditor driven and independent of promoter influence. In the broader context of insolvency jurisprudence, this is a necessary safeguard to maintain institutional integrity.
In Conclusion, the proposed amendments would bridge gaps in the existing CIRP framework and are aligned with present day insolvency realities. It is therefore safe to state that these amendments reflect regulatory maturity rather than regulatory expansion, as they do not alter the architecture of the Insolvency and Bankruptcy Code, 2016 instead, they refine its operational contours based on practical experience.
As the Discussion Paper remains open for public comments until March 10, 2026, stakeholders have an opportunity to contribute to a reform process that appears both thoughtful and necessary. If adopted, these amendments are likely to enhance predictability, reduce avoidable litigation and further consolidate the credibility of India's insolvency framework.
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