The Insolvency and Bankruptcy Board of India (IBBI) has released a Discussion Paper on Measures to Enhance Integrity of the Corporate Insolvency Resolution Process (CIRP), inviting public comments by 27 August 2025. IBBI has proposed following changes in the Regulations for achieving above objectives:
✅ Formal CoC Deliberations on Section 29A Eligibility– Mandating recorded discussions on the eligibility of resolution applicants.
✅ Enhanced Disclosures under Section 32A– Requiring clear statements on beneficial ownership to prevent misuse of the “clean slate” principle.
✅ Digital Submission of Resolution Plans – Leveraging secure electronic platforms to ensure fairness, confidentiality, and efficiency.
These proposals have the potential to significantly improve stakeholder confidence, reduce litigation, and align the process with global best practices. This analysis examines how these proposed changes may impact the resolution process integrity and the compliance burden on insolvency professionals, while exploring alternative approaches.
Current State of India’s Insolvency Resolution Framework
India’s insolvency resolution system, while revolutionary in its conception, faces significant implementation challenges. The statutory timeline of 330 days for CIRP completion is consistently breached, with current average resolution times reaching 761-843 days. Recovery rates for creditors remain disappointingly low at 27-36% of claims, while approximately 65% of cases end in liquidation rather than successful resolution.
Timeline comparison showing significant delays in CIRP resolution process beyond statutory limits
The judicial infrastructure supporting the IBC remains severely constrained, with only 39 out of 63 sanctioned positions filled in NCLT benches, creating significant bottlenecks in the admission and approval processes. These structural deficiencies have normalized delays, undermining the Code’s fundamental time-bound nature.
Analysis of IBBI’s Three Key Proposals
Proposal 1: Mandatory CoC Deliberation on Section 29A Eligibility
Current Gap and Proposed Solution : The current framework places the burden of Section 29A due diligence entirely on Resolution Professionals, with the Committee of Creditors (CoC) implicitly relying on RP certifications. Hon’ble Supreme Court, in “Arcellor Mittal India vs Satish Kr. Gupta” observed that ascertaining Sec 29A compliance is not the responsibility of Resolution Professional alone, but CoC is also equally responsible and must verify the compliance through their own verification rather than relying on RP’s certification. The proposed amendment would require CoC to formally deliberate and record discussions on resolution applicant eligibility under Section 29A.[5]
Integrity Enhancement Potential: High
This proposal addresses a critical oversight gap in the current system. Section 29A eligibility has been a major source of litigation and delays. The Supreme Court emphasized that “great care must be taken to ensure that persons who are in charge of the corporate debtor do not come back in some other form to regain control without first paying off debts”.[6][7]
The formal CoC deliberation requirement would:
· Create an additional oversight layer beyond RP certification
· Reduce post-approval litigation risks by ensuring stakeholder consensus
· Enhance transparency in eligibility determinations
· Distribute accountability between RPs and Committee of creditors
Compliance Burden Impact: Medium
While this proposal adds procedural requirements, the compliance burden appears manageable. CoC meetings already occur regularly, and the additional deliberation would primarily involve:
· Extended meeting duration for eligibility discussions
· Documentation of deliberation minutes
· Potential requests for additional clarification from RPs or applicants
Proposal 2: Enhanced Beneficial Ownership Disclosure for Section 32A
Addressing Complex Ownership Structures
Section 32A of the IBC provides immunity to corporate debtors from prosecution for pre-CIRP offenses, contingent on genuine change in management and control. However, such immunity is not available to incumbent Promoters. The current disclosure requirements are inadequate for complex, multi-layered ownership structures that can obscure ultimate beneficial owners even when they may be the existing promoters camouflaged by layers of holding structures.
Integrity Enhancement Potential: High
The enhanced disclosure requirements directly address the “clean slate” principle’s effectiveness. As noted in Manish Kumar v. Union of India, Section 32A immunity requires complete change in ownership to persons who were not involved in the corporate debtor’s downfall. The proposed beneficial ownership statement would:
· Prevent shell company manipulations and circular ownership structures
· Ensure genuine compliance with Section 32A conditions
· Enable informed decision-making by CoC and judiciary
· Align with global anti-money laundering standards
Compliance Burden Impact: High
This proposal represents the most significant compliance burden increase:
· Complex ownership mapping through multiple jurisdiction layers
· Enhanced due diligence requirements for RPs
· Format compliance with IBBI-specified templates
· Verification challenges for international ownership structures
The burden is particularly acute given that beneficial ownership requirements in India have already increased substantially, with recent amendments requiring disclosure within 30 days of any ownership changes.
Proposal 3: Electronic Platform for Resolution Plan Submission
Digitization of Critical Processes
Building on the success of the eBkray portal for liquidation processes, IBBI proposes mandatory electronic submission of resolution plans through a recognized platform.
Integrity Enhancement Potential: Medium to High
Electronic platforms offer several integrity benefits:
· Standardized processes reducing procedural variations
· Enhanced transparency through centralized information access
· Audit trails for all submissions and modifications
· Reduced information asymmetry among stakeholders
· Time-stamped submissions preventing manipulation
Compliance Burden Impact: Low to Medium
While technology adoption requires initial investment, the long-term compliance benefits appear favorable:
· Initial setup costs for platform access and training
· Learning curve for legal and professional teams
· Potential technical issues during transition period
· Long-term efficiency gains through streamlined processes
Critical Assessment of Impact on Process Integrity
Strengths of the Proposed Framework
1. Multi-layered Verification The proposals create overlapping verification mechanisms – RP due diligence, CoC deliberation, and enhanced disclosure requirements – reducing the likelihood of ineligible applicants succeeding.[13][14]
2. Litigation Risk Reduction Formal CoC deliberation and enhanced documentation should reduce post-approval challenges, addressing a significant source of current delays.[18][19]
3. Technological Modernization Electronic platform adoption aligns with successful digitization efforts in other areas and global best practices.[20][21]
Potential Limitations and Unintended Consequences
1. Increased Process Complexity Additional procedural requirements may further extend already lengthy CIRP timelines, potentially counteracting integrity gains with efficiency losses.
2. Risk of “Checkbox Compliance” Formal requirements without substantive engagement may create procedural compliance without genuine oversight improvement.
3. International Competitiveness Concerns Higher compliance burdens may deter foreign resolution applicants, reducing competition and potentially affecting recovery rates.
Alternative Approaches and Enhancements
1. Risk-Based Compliance Framework
Rather than uniform requirements, a tiered approach based on transaction size and complexity could optimize the compliance-integrity balance:
· Threshold-based requirements: Enhanced disclosures only for transactions above say ₹500 crore
· Fast-track processes for clearly eligible applicants with established track records
· Expedited procedures for MSME cases with simplified ownership structures
2. Technology-Enhanced Due Diligence
Artificial Intelligence and automation could significantly reduce compliance burdens while enhancing verification accuracy:
· Automated background checks against regulatory databases
· Real-time beneficial ownership verification through API integration
· Predictive analytics for identifying potential ineligibility patterns
· Blockchain-based ownership tracking for transparent ownership chains
3. Institutional Capacity Building
Parallel infrastructure development to prevent the proposals from exacerbating existing delays:
· NCLT bench strengthening with dedicated IBC benches
· Specialized training programs for tribunal members on complex ownership structures
· Fast-track approval mechanisms for straightforward/Prepackaged Insolvency cases
· Alternative dispute resolution such as mediation for eligibility disputes
4. Graduated Sanctions Framework
Accountability mechanisms to ensure compliance without paralyzing the process:
ation or delay tactics.
Impact on Insolvency Professional Compliance Burden
Current Challenges for IPs
Insolvency Professionals already face substantial compliance pressures:
· Multiple form filings with overlapping deadlines
· Complex verification requirements under Section 29A
· Regulatory fee obligations and disclosure requirements
· Time-consuming interactions with statutory authorities consuming up to 25% of CIRP timeline
For mitigating such compliance pressures, IBBI may prescribe that cases above certain threshold must be allocated to Insolvency Professional entities which have better infrastructure and dedicated compliance teams.
Projected Impact of New Requirements
CoC Deliberation Requirement
· Additional documentation by way of minuting of commercial justifications and reasons for every decision taken in a CoC meeting
· Extended preparation time for eligibility presentations
· Potential liability exposure for inadequate due diligence
Enhanced Beneficial Ownership Disclosure
· Specialized expertise requirements for complex ownership analysis. However, with this requirement, we expect some specialized service providers may start offering such services in the market.
· International coordination for multi-jurisdictional entities. For this purpose, the provisions for cross-border insolvency must be notified at the earliest.
· Higher professional indemnity costs due to increased verification duties. The IPs and IPEs may go for professional indemnity insurance to cover such risks.
Mitigation Strategies for Compliance Burden
1. Regulatory Support Mechanisms
· Standardized templates and checklists for common scenarios
· Online training programs for new requirements
· Fee structure adjustments reflecting increased complexity
2. Professional Development Infrastructure
· Specialized certification programs for IPs and IPEs for complex ownership analysis
· Technology adoption grants and handholding for smaller IP entities
· Knowledge sharing platforms for best practices. AIPE propose to build one such platform.
· Industry association support for compliance guidance. This is one of the primary missions of AIPE.
Comparative Analysis with International Best Practices
United States Chapter 11 Framework
The US system emphasizes disclosure statements and creditor committee oversight, similar to the proposed CoC deliberation requirements. However, it offers more flexibility in timeline management, suggesting potential adaptability benefits.
United Kingdom Administration Process
The UK framework includes statutory duties for insolvency practitioners regarding beneficial ownership verification, demonstrating international precedent for enhanced disclosure requirements.
European Union Cross-Border Regulation
EU frameworks emphasize electronic submission systems and centralized registries, supporting the technological modernization approach.
Recommendations for Implementation
Phase 1: Foundation Setting (Months 1-3)
· Pilot testing of electronic platform with select cases
· Stakeholder consultation on implementation challenges
· Template development for enhanced disclosure requirements
· Training program initiation for all stakeholders
Phase 2: Gradual Rollout (Months 6-12)
· Threshold-based implementation starting with larger cases and IP Entities.
· Feedback incorporation from pilot programs
· System refinement based on user experience
· Capacity building for NCLT benches
Phase 3: Full Implementation (Months 12-18)
· Universal application of all requirements
· Performance monitoring and adjustment mechanisms
· Impact assessment on resolution timelines and recovery rates
· Continuous improvement based on stakeholder feedback
Conclusion
The IBBI’s proposed regulatory changes represent a thoughtful attempt to strengthen CIRP integrity while addressing systemic vulnerabilities in the current framework. The CoC deliberation requirement and enhanced beneficial ownership disclosure offer substantial integrity benefits, though at the cost of increased compliance complexity. The electronic platform proposal provides the best balance of integrity enhancement with manageable compliance burden.
However, successful implementation requires careful attention to:
· Parallel capacity building to prevent further timeline extensions
· Technology-enabled solutions to minimize manual compliance burdens
· Graduated implementation allowing stakeholder adaptation
· Continuous monitoring of impact on resolution efficiency
The ultimate success of these proposals will depend not just on their design, but on the ecosystem’s ability to adapt while maintaining the fundamental objectives of timely resolution and value maximization. With proper implementation support and parallel infrastructure development, these changes could significantly enhance the credibility and effectiveness of India’s insolvency resolution framework.
The key lies in balancing enhanced integrity with operational efficiency – ensuring that the cure for process integrity doesn’t become worse than the disease of inadequate oversight. Through thoughtful implementation and continuous refinement, these proposals can contribute to making India’s IBC framework more robust, transparent, and effective in achieving its foundational objectives.
We invite all Insolvency Profesisonal Entities to share their views on the above proposals.
🖊 Your voice matters! The IBBI seeks comments from all stakeholders – insolvency professionals, IPEs, financial creditors, corporate debtors, investors, and academics. This is a valuable opportunity to shape the future of the IBC framework. Please read our article to understand the nuances of these changes and share your opinion with IBBI and with AIPE
📄 Read the full discussion paper here: [ link : https://ibbi.gov.in/uploads/whatsnew/166958d0c5d31e4f1f506ce8a6449867.pdf]
💬 Submit your comments by 27 August 2025 at: www.ibbi.gov.in
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