This article is written by Navya Tiwari, a law student at ICFAI University, Dehradun, with a keen interest in Corporate Governance and Alternative Dispute Resolution (ADR).
India’s transition from the creditor-controlled regime to the hybrid insolvency system represents one of the most important stages in its economic legislation. The enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) represented a breakthrough for the corporate distress management in India; however, there are still many issues such as the time-consuming process, the problem of value destruction, and difficulties with jurisdiction that require further changes. This paper critically discusses the proposed “Insolvency 2.0” reforms under the IBC Amendment Bill, 2025, concentrating on the three main pillars Pre-Packaged Insolvency Resolution Process (PPIRP), Group Insolvency scheme, and Cross-Border Insolvency mechanism. Specifically, this research analyzes the innovative aspects of the bill including the introduction of the new Creditor-Initiated Insolvency Resolution Process (CIIRP), the structural changes in the Swiss Challenge approach and the shift from the coordination principle to the judicial one concerning the corporate group. Having considered the comparative experience and the recommendations of the Insolvency Law Committee, it is possible to say that these reforms represent a step towards efficiency and international standards; nevertheless, it is necessary to solve the issue of doctrinal tension especially regarding the promoter’s eligibility, creditor-debtor balance, and implementation of the UNCITRAL Model Law.
Introduction
The Insolvency and Bankruptcy Code was a change for Indias economy when it started in 2016. It replaced a lot of laws with one simple process for companies that were in trouble. The Insolvency and Bankruptcy Code was supposed to help companies get the money from their assets encourage new businesses and make sure everyone was treated fairly. It was also supposed to be an easy process for companies that were in financial trouble. After almost ten years we can see that there are some big problems with the way it works.
So, the government made a bill called the Insolvency and Bankruptcy Code Amendment Bill in 2025. This bill has some changes that should help reduce delays and make the process better for everyone involved. These changes are, like a version of the Insolvency and Bankruptcy Code which we can call the Insolvency and Bankruptcy Code 2.0.
This article looks at the changes that have been made. It checks the laws that are being proposed and how they’re different from the current CIRP framework. The article sees how the courts have made decisions that have changed things and the problems that the new laws are trying to fix. It looks at the rules for Pre-Packaged Insolvency, Group Insolvency and Cross-Border Insolvency to see how they can change the insolvency landscape in India and what problems might come up when they are put into action.
Legislative Evolution: From CIRP to a Multi-Track Framework
The Insolvency and Bankruptcy Code (IBC) of 2016 created a court-supervised process called CIRP to solve corporate financial problems. In CIRP a company management control is given to a professional and a group of creditors called the Committee of Creditors (CoC) leads the process to find a solution through bidding. CIRP helps in recovery and maximizes value. Has some issues like being too rigid and often getting delayed.
In 2021 a change was made to introduce the Pre-Packaged Insolvency Resolution Process (PPIRP) for medium-sized businesses. PPIRP is a mix of talks between the company and its creditors and formal approval, from a court. The company’s management still runs the business. Under the supervision of a professional. A new bill, the IBC Amendment Bill, 2025 suggests expanding PPIRP to all companies, not small and medium ones.
The bill also proposes a process called Creditor-Initiated Insolvency Resolution Process (CIIRP) which lets certain creditors start a restructuring process if a company owes them money. These changes aim to create a flexible system with multiple ways to solve corporate financial problems based on the company’s size and situation. The Insolvency and Bankruptcy Code (IBC) and CIRP and PPIRP and CIIRP processes are tools to solve distress.
The Pre-Packaged Insolvency Resolution Process: Broadening the Horizon
The PPIRP framework was made to help MSMEs which’re very important to Indias economy. These MSMEs often do not have money to survive long legal proceedings. The government has now decided to extend the PPIRP framework to companies through the IBC Amendment Bill, 2025. This is a change and the PPIRP framework is now going to do a lot more. The PPIRP framework is really important for MSMEs. Now it will also be important, for larger corporate debtors.
The Existing Legal Architecture for PPIRP
The PPIRP is governed by Sections 54A to 54P of the IBC. This process helps companies have cost-effective and better results. It also aims to minimize disruption to the business. The PPIRP is a process. The corporate debtor starts it themselves.
- Eligibility and Initiation (Sections 54B & 54C): To be eligible a company must be registered under the MSME Development Act, 2006. The company must have a default of least ten lakh rupees and not more than one crore rupees. The process begins with the corporate debtor getting approval, for a Base Resolution Plan. This plan must be approved by financial creditors. They must represent least sixty-six percent.
The Amendment Bill, 2025: Key Changes and Expansion
The IBC Amendment Bill, 2025 proposes key reforms to the PPIRP framework:
- The biggest change is that the MSME-specific eligibility criteria are being removed. This means large companies can now opt for a resolution process. The central government will decide how and when all corporate debtors can use PPIRP.
- A new process called Creditor-Initiated Insolvency Resolution Process (CIIRP) is being introduced. Under CIIRP financial creditors with 55% of the debt can start an insolvency resolution process. This process will take 150 days with a 45-day extension. The goal is to reduce the load on courts make it easier to do business and increase access to credit.
- The CoC will get powers under Section 54K. They will be able to reject weak resolution plans and invite new ones. This will ensure outcomes for creditors. The PPIRP will work more like the CIRP, which is based on wisdom.
- The IBC Amendment Bill wants to make PPIRP better for all debtors, not just MSMEs.
- The PPIRP framework will have checks and balances with the new changes.
Group Insolvency: A Framework for Coordination
The IBC Amendment Bill, 2025 introduces a framework to resolve insolvency cases involving two or more debtors within a group. This is a step because when group entities are under separate proceedings it often leads to loss of value lots of litigation and not great outcomes.
- Voluntary Coordination Framework: The proposed framework is expected to be a process that helps coordinate insolvency cases. It is not a consolidation mechanism. This framework is based on the UNCITRAL Model Law on Enterprise Group Insolvency. It allows for a court, a shared insolvency professional or group coordinator, coordination of cases and a joint committee of creditors’ committees.
- Addressing the Videocon Challenge: The Videocon Group case showed why such a framework is needed. In this case 13 corporate debtors required coordination among creditors and a single resolution plan. The group insolvency framework aims to make such cases simpler. It aims to save costs and time while giving the possible outcome, for all stakeholders.
Cross-Border Insolvency: Aligning with the UNCITRAL Model Law
India has been dealing with -border insolvency for a long time. The rules under Sections 234 and 235 of the IBC are very basic. They give the central government the power to make agreements with other countries but these agreements have not been used yet. Indian courts have been helping companies restructure on a case-by-case basis. They have recognized some foreign court decisions based on the principle of comity of courts like in the Jet Airways case. However not having a law in place makes things uncertain for investors and creditors from other countries.
 The New Plan: The IBC Amendment Bill of 2025 gives the Central Government the power to make rules to deal with -border insolvency issues of companies. Even though the details of the plan have not been announced yet the law shows that the government wants to create a system.
The Debate About the UNICTRAL Model Law: The Insolvency Law Committee suggested that India should use the UNCITRAL Model Law on Cross-Border Insolvency from 1997. With some changes to fit Indias situation. The new plan is not likely to be a copy of this law but rather a system that balances fairness to all countries with protection for Indian creditors. The proposed Part Z, which was based on the Model Law is still waiting to be passed. Will probably be the basis for the new rules. India is trying to make a law that works for -border insolvency and this is an important step. The IBC Amendment Bill is a change, for India and it will help India deal with cross-border insolvency issues in a better way.
Judicial Developments and the Constitutional Conundrum
While laws around Insolvency 2.0 are still changing court decisions will greatly influence how it works. The Supreme Court’s rulings on the legitimacy of provisions the limits of the moratorium period and the powers of the authority making decisions have a big impact on how effective the law is in practice. Recently courts have confirmed that the Insolvency and Bankruptcy Code (IBC) is constitutional and plays a role in managing the economy. They have also tried to balance the finality of a resolution plan with the rights of stakeholders. A notable judgment in the case of China Development Bank v. Doha Bank made it clear that the moratorium period does not cancel out creditors’ claims. Only stops them from recovering their dues for a while. This distinction is very important for cases involving insolvency across borders and for groups.
As new rules for pre-packs, group insolvency and resolving insolvency across borders start to apply courts will have to interpret provisions. These include the disqualification under section “29A” the powers of the Committee of Creditors (CoC) to make decisions and the recognition of insolvency proceedings from other countries. This will ensure that these new mechanisms do not become ineffective due, to procedures related to Insolvency 2.0 IBC and Insolvency 2.0.
Conclusion
The Insolvency 2.0 reforms are a change in how India deals with companies that are in trouble. The proposed changes in the IBC Amendment Bill, 2025 aim high. Look to the future. They want to fix the problems that have slowed down the Code. By making the Pre-Packaged Insolvency Resolution Process available to all debtors introducing a framework, for group insolvency and setting up a comprehensive cross-border insolvency regime. India is showing it wants a fair and globally competitive insolvency system.
The Insolvency 2.0 reforms and the Insolvency Code must balance speed with fairness. This balance must be achieved through judicial discipline and clear legislative intent. For the Insolvency Code to achieve its goals the Insolvency 2.0 reforms must be implemented with an understanding of the challenges. They must also commit to creditor rights. Find a balance that keeps the core principles of the Insolvency Code while using the flexibility offered by these new tools. The Insolvency 2.0 reforms and the Insolvency Code are crucial for India to have an insolvency ecosystem.
