CIRP Amendments 2025: Another Step Towards Faster and Fairer Resolutions
- CCL NLUO
- Jun 29
- 6 min read
Authors: Yarabham Akshit Reddy & Yashika Lakhotia
Fourth year law students at Hidayatullah National Law University, Raipur
I. Introduction
On 26th May 2025, the Insolvency and Bankruptcy Board of India ("IBBI") notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendments) Regulations, 2025 ("2025 Amendments"), amending certain provisions of existing IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"). These amendments bring forth structural and procedural reforms to the Corporate Insolvency Resolution Process ("CIRP") under the Insolvency and Bankruptcy Code, 2016 ("IBC"), with the objective of enhancing transparency, creditor protection and ease of doing business. Through this post, the authors discuss the 2025 Amendments and their likely impact on streamlining the resolution process and address the emerging challenges in their implementation.
II. Unpacking The 2025 Amendments: Implications and Insights
(i) Observer Status for Interim Financers:
The 2025 Amendments have inserted Regulation 18(5), which allows the Resolution Professional ("RP") to invite Interim Finance Providers ("IFPs") to attend the Meetings of the Committee of Creditors ("CoC") as observers without voting rights, subject to the CoC’s discretion. Section 5(15) of IBC defines ‘Interim Finance’ as any financial debt raised by the RP during the CIRP Period. This funding plays a crucial role in enabling the RP to maintain the ‘Going Concern’ status of the Corporate Debtor ("CD") and to meet essential operational and CIRP-related expenses until a resolution plan is approved by the CoC.
Interim Financing serves as a lifeline for distressed and ailing companies, providing them with much-needed debt during the CIRP period, where traditional lenders perceive them as high-risk investments. This Amendment, coupled with the super-priority status of interim finance under the IBC, ultimately contributes to the effective resolution outcomes.
The IBBI, in its discussion paper, noted that IFPs often hesitate to extend or augment funding due to their lack of direct access to CoC meetings and limited visibility into CIRP’s progress, leading to broader information asymmetry. This restricts them from assessing and monitoring their investment risks and understanding the operational performance of CD during CIRP. By giving them observer status in CoC meetings, this amendment promotes greater transparency and builds an effective engagement with IFPs.
(ii) Expanding the Scope of Expression of Interest (EOI):
Another significant amendment is the insertion of Regulation 36 (1A). This allows the RP, with the approval of CoC, to invite EOIs for submission of resolution plans for CD as a whole or sale of one or more assets or both concurrently. This marks a significant departure from earlier Regulation 36 (6A), which has now been omitted. This regulation mandated a sequential process. That is, firstly, the RP shall invite resolution plans for the entire CD, and only upon failing to receive such a plan, can invite resolution plans for the sale of separate assets. This rigid sequencing resulted in extended CIRP timelines and increased the risk of value erosion of CD while waiting for the sequential process to complete.
By allowing this flexibility, the amendment enables the RP to invite resolution plans for both CD as a whole or for the sale of separate assets, concurrently or separately. This would attract broader investor participation interested in specific assets rather than CD as a whole and maximise the asset value by facilitating a more efficient and time-bound completion of CIRP.
However, if the RP first chooses to invite resolution plans for the sale of separate assets, it may be presumed that this would include all the assets of CD. Yet, in practice, a CD may have a combination of functional and non-functional assets, and Resolution Applicants (RA) may choose resolution plans for only specific assets, which might interest specific bidders. Further, the Standing Committee on Finance Report has also highlighted that bidders may be interested in select business units or assets of CD rather than CD as a whole. This would reduce the attractiveness of remaining assets.
Regulation 37(m) mandates that each resolution plan shall provide for the manner of dealing with the remaining assets. However, the CIRP Regulations provide no guidance on what constitutes an “acceptable manner” or how to treat the remaining non-viable assets. In such scenarios, these leftover assets may inevitably be pushed towards liquidation. Such an outcome would go against the core objectives of IBC, which is to resolve/rehabilitate the CD rather than liquidate, wherever possible.
Therefore, to address this and to avoid unintended liquidations, the RPs should be mandated to concurrently invite Resolution plans for CD as a whole and individual assets, as proposed by the IBBI discussion paper. If no resolution plans are submitted for the entire CD, then the RP should be permitted to proceed with the asset-wise resolution plans, subject to CoC’s approval. This approach would not only align with the legislative intent of the IBC but also preserve the asset value and ensure the timely resolution of CDs, minimising delays and costs.
(iii) Priority Payout to Dissenting Creditors
The 2025 Amendments have broadened the scope of Regulation 38 of the CIRP Regulations by allowing for pro-rata and priority payments to dissenting creditors when the resolution plan provides for payment in stages. The pre-amendment regulations provided for priority payments to dissenting creditors at once, before paying the assenting creditors. This disadvantaged the assenting creditors who could not get any payouts during staged payments, until the claims of dissenting creditors were satisfied. The 2025 Amendments fill this lacuna by paying such creditors when the payment is envisaged to be in stages in the resolution plan.
This amendment addresses a very practical aspect of CIRP, wherein funds are generally released by the successful resolution applicant in parts, and in every part, there might be different stages of fund infusion. With this, is it being ensured that the assenting creditors are also paid some amount in each stage, along with the dissenting creditors, even though the dissenting creditors have priority. The ruling of NCLAT Chennai in RBL Bank v. Sical Logistics Ltd. also reinforces the intention behind this amendment.
While this is a welcome move, certain clarifications and safeguards must be provided by IBBI. Firstly, the regulations do not specify whether the payment must be according to the liquidation value, the security interest, or according to the admitted claims in the resolution plan. Even if this is read with Section 30(2) of IBC, a minimum value to be paid to the dissenting creditors would be equivalent to the liquidation value. Since the Regulations don’t specify the quantum of payments, this may lead to the creditors leveraging their positions for a higher and quicker payout by dissenting from the plans (where the plan value is less than the liquidation value), compromising the integrity of the CIRP.
(iv) Presentation of all plans before the CoC
Pursuant to the amendment of Regulation 39, the RPs are now directed to present all Resolution plans, whether compliant or non-compliant, to the CoC, along with a detailed report highlighting any areas of non-compliance. Previously, the RP was required to submit only those plans that were fully compliant with Section 30(2) of IBC or any other relevant regulations. This change was also proposed in the IBBI Discussion paper and the Essar Steel judgment (paragraph 81), which emphasised that presenting all plans with the CoC would enhance transparency and support more informed decision-making. Importantly, it allows the CoC to identify commercially valuable elements within non-compliant plans, which could be proposed to RAs in future solicitation rounds, if no resolution plan is approved in the initial phase.
The interpretation in the ArcelorMittal judgment (paragraph 77) must also be highlighted here, wherein the Supreme Court held that the role of RP is not adjudicatory but merely administrative. The RP can only cull out the non-compliances of a plan and provide the details of the same to the CoC, but it does not have the authority to reject a plan on such grounds.
While this change enhances transparency and respects CoC’s commercial wisdom, it may also lead to delays in the resolution process. The requirement for RPs to scrutinise and report on every plan increases their due diligence burden, which could delay submission timelines. Additionally, the CoC must also evaluate all the resolution plans, further extending the approval process. These procedural delays could push the resolution process beyond the prescribed CIRP timelines, undermining the swift resolution of CD as a going concern.
III. Conclusion
The amendments brought forth would be a welcome change in the CIRP, aiming at increasing transparency and efficiency, ensuring that the objectives of IBC are preserved. While the authors have attempted to provide an impact analysis, the real-world application of these changes must be seen to deliberate on adjusting the CIRP timelines.
By expanding the scope of EOI, ensuring fair treatment of all creditors, enhancing the role of IFPs and mandating the presentation of all plans to CoC, the 2025 Amendments aim to address critical procedural challenges. While the commercial wisdom of CoC remains non-justifiable, it must be ensured that CoC’s discretion is exercised transparently and responsibly. The IFPs must receive adequate visibility regarding the use of their funds in the revival process of the CD. Ultimately, the goal should be to facilitate timely and efficient resolution, even in the face of increased due diligence and wider solicitation of EOIs.
