More Stories

Informist, Tuesday, Feb. 17, 2026

 

NEW DELHI – The Insolvency and Bankruptcy Board of India has proposed that all delayed claims submitted against a corporate debtor and accepted by the resolution professional should be placed before the National Company Law Tribunal within a week to decide whether the delay can be condoned. Only if the tribunal agrees to condone the delay will the claims be placed before the committee of creditors for its recommendation on how to treat them in the resolution plan.

 

The insolvency board's proposal aims to remove the ambiguity regarding the sequencing and scope of consideration of such delayed claims. Earlier, some stakeholders had come up with the interpretation that only delayed claims that receive a recommendation from the committee of creditors have to be placed before the tribunal. As a result, delayed claims accepted by the resolution professional have, in some cases, not been placed before the tribunal simply because of the absence of a recommendation by the committee of creditors, leading to procedural inconsistency and avoidable disputes, the board said.

 

The board has also suggested expressly excluding related operational creditors from participation in the committee of creditors constituted under Regulation 16 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This would ensure that only unrelated operational creditors participate in the decision-making process in cases where the committee of creditors is constituted exclusively of operational creditors, thereby preserving independence, neutrality, and creditor primacy under the Insolvency and Bankruptcy Code, 2016.

 

Currently, Regulation 16 expressly excludes related financial creditors from the committee of creditors to preserve the independence of decision-making but does not exclude related operational creditors. This has given rise to conflicts of interest, influence by promoters or related entities through operational debt structures, and outcomes inconsistent with the objective of creditor-driven resolution, the board said.

 

The IBBI has proposed that in addition to the existing requirement to record deliberations on feasibility and viability of resolution plans, the committee of creditors shall also state its discussions on the expected recovery for creditors in comparison with the fair value and liquidation value. The committee of creditors should state the adequacy of market discovery undertaken during the corporate insolvency resolution process, including, where applicable, the use of a challenge mechanism or reinvitation of resolution plans, and the capability and credibility of the resolution applicant and the certainty of implementation of the resolution plan, including availability of funds, the board said. This is expected to promote greater transparency, consistency, and evidentiary robustness in the corporate insolvency resolution process while fully preserving the commercial wisdom and decision-making autonomy of the committee of creditors, it added.

 

Further, the board proposed that all costs incurred during the initial period of the company going into insolvency shall be fully disclosed by its interim resolution professional to the committee of creditors at its first meeting and placed for post-facto approval, together with a brief justification demonstrating that the expenditure was necessary for value preservation and was not part of any indiscriminate or mechanically continued business operations. This proposal is to address the gap during the initial phase of the corporate insolvency resolution process, when the interim resolution professional is required to incur costs in the absence of a duly constituted committee of creditors.

 

The board also suggested that placing of a structured going concern assessment report before the committee of creditors at its first meeting should be mandatory. The assessment report should examine the financial viability of operations, estimated income, expenditure, and associated cash flows, working capital requirements, and the risks of value erosion arising from continuation or suspension of operations of the debt-ridden company. Based on this assessment, the committee of creditors shall take an informed commercial decision on whether the corporate debtor should be run as a going concern and, if so, the scope, scale, and duration of such operations, the IBBI said. This decision shall form the commercial basis for incurring future operational insolvency resolution process costs, it added.

 

In addition, after the first meeting of the committee of creditors, all insolvency resolution process costs of the corporate debtor shall be incurred only with the prior approval of the panel, supported by periodic financial estimates and comparison of approved estimates with actuals, to ensure continuous monitoring by creditors, transparency, and cost discipline. These steps are expected to help reduce resources burn, insolvency resolution process costs, blockage of resources in receivables, and erosion of enterprise value, the board said.

 

The board has proposed these amendments in a discussion paper on strengthening supervision by the committee of creditors and providing procedural clarity under the Corporate Insolvency Resolution Process Regulations, 2016. It has invited comments on the proposals from all stakeholders by Mar. 10.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.