Hello! Welcome back to our updates from the insolvency law landscape in India.
In the news
On 28.05.2026, the Insolvency and Bankruptcy Code, 2016 (“IBC”) marked a decade on the statute books. In that decade, the IBC has helped creditors recover over Rs 4 lakh crore and has steered 1,419 corporate entities through resolution. Built to stop enterprise value from bleeding away, the Code has of late drawn concerns over the delays in approval of resolution plans. The Supreme Court recently took serious note of the fact that a resolution plan approved by the CoC had remained pending before the NCLT for nearly two years and expressed concern over similar delays in approval applications across various NCLT benches, seeking nationwide data from the IBBI and NCLTs on such pendency. Indeed, the Supreme Court has stepped in on its own, taking suo moto cognizance of the issue. Our team at Sarthak Advocates & Solicitors submitted a report to the Supreme Court on precisely this concern. In the sample we studied, plans had been gathering dust for more than 340 days.
Drawing on a decade of lessons, Parliament passed the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (“2026 Act”) on 01 April 2026. On 22 May 2026, the central government notified a first tranche of the 2026 Act’s provisions. The headline reforms on the Creditor-Initiated Insolvency Resolution Process and Group Insolvency are still on hold, but most of the rest are notified and have been live since 26 May 2026. Here’s what has changed:
- Amendment to the definition of “security interest” to exclude a security interest or charge created by operation of law such as an unpaid seller’s lien under the Sale of Goods Act, 1930. Security Interest would now mean such security that has been created by mutual agreement between the parties.
- The Adjudicating Authority is required to ascertain within 14 days of receipt of the application under Section 7(2) of IBC whether to admit or reject the application and if it lets the 14-day clock run out, it must put its reasons on record.
- The same discipline applies under Section 9 of the IBC: if the NCLT does not decide within 14 days, it too must put its reasons in writing.
- No easy exit: Once the CIRP has been admitted, withdrawal of application admitted under Section 7, 9 or 10 of the IBC requires the Committee of Creditors (“CoC”) to be in place plus the consent of CoC members holding at least 90% of the voting shares. And once the first invitation for a resolution plan goes out, the door to withdrawal shuts entirely.
- Central Government has been empowered to write the rulebook for cross-border insolvency, including recognising insolvency proceedings of companies registered outside India.
From the Docket
No second bite at the apple: In Sanjay Dave v. Andhra Bank, the Supreme Court drew a firm line in the sand. Once the CoC has applied its commercial wisdom and approved a resolution plan, the successful resolution applicant (SRA) cannot circle back to the negotiating table. The message is clear — the SRA must roll up its sleeves and implement the plan within a strict, time-bound framework, not haggle over it.
Piercing the corporate veil: In Alpha Corp Development v. GNIDA, the Supreme Court refused to let corporate structure stand in the way of substance. GNIDA had persuaded the NCLAT to block the resolution plans (submitted by Roma Unicon and Alpha Corp) for projects developed by Earth Infrastructure Limited (“EIL”) through its subsidiaries, arguing that the subsidiaries’ assets were not EIL’s and that leasehold rights could not change hands without GNIDA’s consent. The Supreme Court allowed the appeal and saw straight through the arrangement: this was an eminently fit case to lift the corporate veil, since EIL was the true driving force behind both the projects and the payment of GNIDA’s dues, with the subsidiaries serving as little more than a front.
No copy, no appeal: In Angelwoods Apartment Allottees Association vs. M Lalitha, the Supreme Court held that turning up at the NCLAT with an appeal but never bothering to apply for a certified copy of the NCLT order is, in the eyes of law, no appeal at all. The lesson for litigants is simple — a diligent party chases down the certified copy before the limitation clock runs out, and that diligence pays off: the time spent procuring the copy can then be excluded when computing limitation.
Resolution, not recovery: In Dhanlaxmi Bank Limited vs. Mohammed Javed Sultan and Ors., the Supreme Court made one thing clear: the IBC is a resolution mechanism, not a recovery counter — it cannot be wielded by an individual creditor as a tool for coercion or debt recovery, nor as a forum to litigate one-off contractual claims. The Supreme Court also looked past form to substance: where the loan was paid straight to the builder and the disbursal was tied to the builder performing its obligations, the deal cannot be read in isolation as a plain-vanilla loan between the bank and the corporate debtor.
Disclaimer
The content provided in this newsletter is intended for general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional regarding any specific issues mentioned herein. If you have any questions about any of these developments or would like to see something different next month, reach out to us at knowledge@sarthaklaw.com.