The IBBI has released a discussion paper on Creditor-Initiated Insolvency Resolution Process (CIIRP) under the IBC Amendment Act 2026.
IBBI Proposes Fast-Track Out-of-Court Insolvency
The Insolvency and Bankruptcy Board of India (IBBI) has come out with a discussion paper on creditor-initiated insolvency resolution process (CIIRP), a new out-of-court mechanism introduced in the recently-passed IBC Amendment Act 2026. The document provides an orderly and efficient procedure for creditors to initiate their own claims against insolvent companies. It also sets out rules for various stakeholders who will be involved in the CIIRP.
The paper has introduced a significant number of new components to conduct the CIIRP, including the mandate to obtain approval of 51% creditors (by value) to initiate the process. The paper also provides a timeline of 150 days – that can be extended for another 45 days with the approval of 66% creditors – for the adjudicating authority to approve the resolution plan. This is shorter than the statutory limit of 330 days provided to approve a resolution plan under the conventional insolvency framework.
Importantly, the management of the company remains with the present promoters, but with oversight such as obtaining prior approval of the committee of creditors (CoC) for carrying out transactions above a certain threshold.
Judicial Oversight Shifts
Experts said that the draft regulations transform the approval of the moratorium under CIIRP into a judicial application rather than an automatic default. This is in stark contrast to the moratorium under corporate insolvency resolution process (CIRP) which is automatic and mandatory upon admission of the insolvency application by National Company Law Tribunal (NCLT). “This provides courts with greater flexibility to be involved in initiating a bankruptcy process, but it may introduce uncertainty into disputes in such situations,” said Varun Singh, founder & managing partner at Foresight Law Offices India.
As of December 2025, over 8,600 CIRP cases have been admitted under the IBC, and around Rs 4.11 lakh crore has been recovered from them. As per estimates, around 10,000 cases remain pending for admission, and the bankruptcy of these cases amounts to over Rs 10 lakh crore of defaulting assets. “With only select notified financial institutions eligible to trigger CIIRP, and continued dependence on NCLT for approvals and conversions, capacity constraints could dilute the intended efficiency gains,” said Singh.
Implementation Challenges
Devendra Mehta, partner at PwC said that the efficacy of CIIRP hinges on the contours of its applicability, the creditors it encompasses, as well as the thresholds relating to debt size, asset base, and income of the corporate debtor, as may be notified by the central government. “The proposed CIIRP regulations gives effect to the legislative framework, and draw substantially from the architecture of the existing CIRP regulations. However, the rationale underpinning the preferential appointment of an insolvency professional entity under Regulation 8 remains unclear,” he said.
CIIRP is a novel concept in the Indian insolvency framework that gives a chance to present promoters to revive the company in case of genuine business failures.
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