Asset-Wise Resolution Plans Under IBC: How Multiple Bids Could Reshape CIRP and Value Maximisation

India’s insolvency framework may be on the threshold of a significant structural transformation. A proposal examined by a Lok Sabha Select Committee on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, has recommended explicitly permitting resolution plans to be submitted and approved on an asset-wise or business-unit basis, rather than insisting on a single consolidated resolution for the corporate debtor as a whole. If adopted, this reform could recalibrate the Insolvency and Bankruptcy Code, 2016 (IBC), from a uniform, one-size-fits-all mechanism to a more commercially responsive and market-driven regime.

The Existing Framework: Finality Through a Single Resolution

Under the current IBC architecture, multiple prospective resolution applicants may submit competing plans, but the Committee of Creditors (CoC) is statutorily empowered to approve only one resolution plan for the corporate debtor as a going concern. Once approved by the National Company Law Tribunal (NCLT), the plan attains finality and becomes binding on all stakeholders. Indian insolvency jurisprudence has consistently reinforced this principle of finality, leaving no statutory recognition for alternative or contingent plans.

This rigidity has exposed systemic vulnerabilities. Where an approved plan is later set aside by appellate courts or fails at the implementation stage, the insolvency process often faces collapse, reopening the prospect of liquidation or necessitating a restart of proceedings—both of which erode value and prolong uncertainty.

Judicial Experience and the Limits of the Single-Plan Approach

Several high-profile insolvency cases have underscored the risks inherent in the consolidated resolution model. Judicial invalidation of approved plans on grounds of delay, non-compliance, or procedural infirmity has demonstrated how dependent the system is on the survival of a single resolution outcome. When that outcome fails, the entire process unravels, irrespective of whether individual business units or assets remain viable.

These experiences have fuelled concerns that the current framework, while conceptually coherent, may not always maximise value in cases involving diversified businesses, asset-heavy enterprises, or conglomerate structures.

The Proposed Shift: Asset-Wise and Business-Unit Resolution

Against this backdrop, the Select Committee has recommended that companies undergoing corporate insolvency resolution should be permitted to receive and consider separate resolution plans for distinct assets or business verticals. The stated objective is to unlock higher value realisation by allowing viable segments of a distressed enterprise to be resolved independently, rather than being weighed down by weaker or unrelated divisions.

Such an approach could broaden bidder participation by enabling strategic investors to focus on assets aligned with their operational strengths, without assuming group-level liabilities or risks. It also promises more granular price discovery, as bidders would no longer need to discount their offers to account for unrelated or loss-making components of the corporate debtor.

Regulatory Momentum: IBBI’s Part-Wise Resolution Framework

Importantly, the legislative proposal does not emerge in isolation. Earlier in 2025, the Insolvency and Bankruptcy Board of India (IBBI) amended the CIRP Regulations to introduce the concept of part-wise resolution. Under the amended framework, a resolution professional, with CoC approval, may invite resolution plans simultaneously for the corporate debtor as a whole, for specific assets or business units, or for both.

This regulatory development was aimed at reducing delays, preventing value erosion in operationally sound segments, and attracting a wider spectrum of investors, particularly strategic buyers unwilling to absorb enterprise-wide risks. The Select Committee’s recommendation can thus be seen as an attempt to provide statutory backing to an evolving regulatory and market practice.

Impact on Value Realisation and Creditor Outcomes

From a creditor’s perspective, asset-wise bidding could enhance recoveries and strengthen the CoC’s negotiating position. Insolvency data released by the IBBI indicates that while creditors have realised recoveries exceeding liquidation value under approved resolution plans, the overall recovery remains significantly below admitted claims, and timelines continue to exceed statutory expectations.

Allowing parallel or segmented bidding may introduce competitive tension across multiple assets, potentially improving outcomes where a single buyer is unwilling or unable to take over the entire enterprise. It may also reduce the risk of value destruction where delays or litigation derail a consolidated plan.

The Continuing Role of the RFRP and CoC Discretion

Despite the proposed flexibility, the request for resolution plan (RFRP) is likely to remain the central instrument through which the CoC structures the process. The RFRP can define eligibility, evaluation criteria, and sequencing, enabling the CoC to balance flexibility with control. Properly designed, it can ensure that asset-wise resolution does not undermine transparency, fairness, or creditor primacy.

At the same time, insolvency experts caution that permitting multiple plans should not be conflated with the creation of a formal “backup plan” regime. Indian insolvency law has consistently prioritised certainty and finality once a plan is approved. Unless the statute explicitly provides otherwise, retaining alternative plans as contingent fallbacks may raise complex legal and constitutional questions.

Risks and the Need for Guardrails

While the proposed reform promises commercial realism, it is not without risks. A poorly calibrated framework could encourage selective acquisition of profitable assets, leaving distressed or socially significant segments unresolved. Without clear statutory guardrails, asset-wise resolution could fragment enterprises in a manner that undermines employment, operational continuity, or stakeholder confidence.

Accordingly, any legislative amendment would need to carefully balance value maximisation against systemic stability, ensuring that flexibility does not come at the cost of coherence or fairness.

Conclusion: An Evolution, Not a Departure

The move towards asset-wise resolution represents an evolutionary shift rather than a rejection of the IBC’s foundational principles. It reflects an acknowledgement that insolvency resolution must adapt to commercial complexity and market realities. If implemented with precision and safeguards, the reform could enhance value realisation, expand investor participation, and reduce systemic risk—while preserving the core objectives of creditor-driven resolution and legal finality that underpin India’s insolvency regime.