IBBI Notifies Fourth Amendment to CIRP Regulations, 2025: Enhancing Creditor Rights and Procedural Clarity

On 26th May 2025, the Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025 through Notification No. IBBI/2025-26/GN/REG127. These amendments aim to refine and strengthen the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC), enhancing transparency, flexibility, and fairness in the resolution process.

Key Amendments:

1. Participation of Interim Finance Providers (Regulation 18(5)):

   
   

   The Committee of Creditors (CoC) is now empowered to invite interim finance providers as observers (without voting rights) to attend CoC meetings. This enhances transparency and ensures that crucial stakeholders involved in financing distressed companies are kept informed of proceedings.

   
   

2. Flexibility in Inviting Resolution Plans (Regulation 36A(1A)):

   
   

   The Resolution Professional (RP), with CoC approval, may invite Expressions of Interest (EOI) for resolution plans that:

   
   

   • Cover the corporate debtor as a whole,

     
     

   • Involve the sale of one or more assets, or

     
     

   • Include both options. This change enables tailored resolution strategies, encouraging broader participation and better recovery outcomes.

     
     

3. Omission of Regulation 36B(6A):

   
   

   Sub-regulation (6A) of Regulation 36B has been omitted, potentially to eliminate redundancy or align the regulation with recent procedural simplifications (specific details of omitted content not provided in the notification text).

   
   

4. Priority Payments for Dissenting Financial Creditors (Regulation 38(1)(b)):

   
   

   A new proviso has been inserted that mandates pro-rata and priority payment to dissenting financial creditors in staged resolution plans over those who voted in favour. This protects minority creditor rights and ensures equitable treatment in multi-phase resolution strategies.

   
   

5. Clarification and Standardisation in Evaluation of Resolution Plans (Regulation 39):

   
   

   • Sub-regulation (2) has been revised to require the RP to present all resolution plans, including non-compliant plans, along with details.

     
     

   • Sub-regulation (3)(a) reaffirms that only compliant plans should be considered for approval by the CoC. These amendments ensure clarity in the screening and evaluation process and reaffirm the requirement that resolution plans must meet IBC criteria.

     
     

Conclusion:

These amendments reflect IBBI’s ongoing efforts to improve CIRP by increasing stakeholder inclusiveness, allowing flexible resolution mechanisms, and reinforcing creditor protections. With the formal involvement of interim finance providers and enhanced options for asset sales, the regulatory changes promote transparency and practical resolutions aligned with commercial realities.

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