New IBC rules to curb promoter delays

Promoters seeking to halt bankruptcy proceedings by repaying creditors will need to settle dues at an early stage, instead of waiting for rival bids from potential investors, under amendments to India’s Insolvency and Bankruptcy Code (IBC) now before Parliament, experts said.

- Gireesh Chandra Prasad [e-mail]

The Insolvency and Bankruptcy Code (Amendment Bill, 2025 seeks to overhaul the rules for withdrawing bankruptcy proceedings by limiting settlements to an early window and requiring nod from 90% of lenders, a move aimed at curbing tactical delays and protecting integrity of the bidding process.

The bill bars promoters from offering settlement once lenders that placed the distressed business under administration of a professional invite bids from new investors.

This prevents the possibility of promoters dragging their feet till they get an idea of what the company may fetch in the market and then making an incremental settlement offer to withdraw the bankruptcy proceedings, said experts.