Group insolvency rules to solve complex cases soon

Individual cos, creditors to be bound by a coordination pact enforceable by NCLT

- Gireesh Chandra Prasad

The Centre is laying the groundwork for a new insolvency framework that could see a single administrator and a common bench for resolving bankruptcies of related companies within the same business group.

According to two people familiar with the matter, the new framework is designed to make the process more efficient, cut costs, and improve the overall value for creditors. The proposed group insolvency rules aim to streamline the complex and often lengthy process of untangling distressed corporate empires.

"The rules will be designed to keep the cost of debt resolution of the entities minimum, avoid duplication, preserve the synergy among the entities and improve the overall value realization of the enterprises," one of the two people said on the condition of anonymity. The rules will be issued once the IBC (Amendment) Bill 2025 is cleared by the Parliament.

The new framework addresses the long-standing need for a system to rescue companies linked by common ownership or control, a topic that has been frequently discussed since the IBC's debut in 2016.