An analysis of the key amendments to the Insolvency and Bankruptcy Code in 2024 and their practical implications for lenders, promoters, and resolution applicants.
Key Amendments in the IBC (Amendment) Act 2024
The Insolvency and Bankruptcy Code (Amendment) Act 2024 introduced several structural changes to the corporate insolvency resolution process (CIRP). The most significant amendment is the introduction of mandatory pre-packaged insolvency for mid-size companies (with total assets between Rs 10 crore and Rs 50 crore), which requires creditors to explore a pre-approved resolution plan before filing for formal CIRP admission. This amendment follows the successful implementation of the pre-packaged insolvency scheme for MSMEs and aims to reduce the NCLT docket by resolving mid-size cases outside the full CIRP process.
The 2024 amendments also clarify the "group insolvency" framework, permitting the simultaneous filing and coordinated resolution of insolvency proceedings for companies within the same corporate group where the financial distress has common causes. The group resolution mechanism allows for a single resolution professional to manage the proceedings for all group entities and for a consolidated resolution plan to be put to the collective creditors' committee (CoC), significantly improving the efficiency of resolution for conglomerate groups in financial distress.
Impact on Lenders and the CoC Process
For secured financial creditors — banks and NBFCs — the 2024 amendments strengthen several provisions that improve their recovery outcomes. The amendment to Section 25 requires that the resolution professional complete the process of inviting resolution applications within 90 days of the CIRP commencement date, reducing the time that lenders spend in a moratorium period without interest accrual on their NPA account. The enhanced obligation to publish resolution plan information on the NCLT's public portal improves transparency and attracts a wider pool of resolution applicants.
CoC composition has also been addressed in the amendments. Where the CoC includes both financial and operational creditors, the amended provisions give operational creditors an enhanced voice in evaluating resolution plans, though voting rights remain solely with financial creditors. The treatment of disputed claims — particularly inter-creditor disputes between multiple secured creditors with overlapping security — has been streamlined through a mandatory fast-track claims resolution process that must be completed before the resolution plan is voted upon.
Implications for Resolution Applicants and M&A Strategy
For strategic acquirers considering IBC as an M&A channel, the 2024 amendments improve the predictability of the CIRP process and reduce some of the post-acquisition regulatory risks. The Section 32A protection — which shields the successful resolution applicant from criminal liability for actions committed by the corporate debtor before the resolution plan approval — has been clarified to cover a broader range of offences, including environmental violations discovered post-acquisition. This clarity is important for acquirers of manufacturing and industrial assets where pre-acquisition environmental compliance is difficult to verify fully.
The amendment also introduces new requirements for resolution applicants disclosing their financing structure for the resolution plan implementation. Applicants must now provide confirmed financing letters from lenders (not merely indicative term sheets) before the plan is presented to the CoC. This requirement reduces the risk of plan failure post-approval due to financing gaps, which was a recurring problem in the earlier framework. Acquirers structuring IBC bids must therefore secure committed financing earlier in the process and factor the additional diligence timeline into their acquisition planning.
