Asset pool for creditors to expand with changes to IBC

Creditors could get back money from more shady promoter transactions after the changes

- Gireesh Chandra Prasad

Creditors to bankrupt firms could get their hands on a wider pool of valuable assets and claw back money from more shady promoter transactions, once latest changes to India's insolvency rules take effect.

While the Insolvency and Bankruptcy Code (IBC) remains the primary mode for bankruptcy resolution, lenders often seize assets of defaulting firms under various other laws; however, such assets stay with the individual banks themselves.

The amended law will aid in bringing such assets—also seized from the defaulter's personal or corporate guarantors, essentially, its promoters, corporate parent, or an associate company—within the pool of assets for resolution.

Experts said this increases flexibility in rescuing firms and fetches better value for the business, rather than selling assets by individual lenders in a fragmented way.

However, the process is not automatic, and must be approved by the committee of creditors supervising the resolution.

On Tuesday, the Lok Sabha referred the Insolvency and Bankruptcy Code (Amendment) Bill 2025 to a select committee of Parliament.