The Insolvency and Bankruptcy Code, 2016 has been amended several times since its enactment, each round seeking to address operational bottlenecks that have slowed the resolution process. The most recent amendments introduce stricter timelines for admission and closure of proceedings, clarify the treatment of related-party transactions during the corporate insolvency resolution process (CIRP), and modify the waterfall mechanism for distribution of resolution proceeds.
For financial creditors, the tighter admission timelines mean that applications that are not procedurally complete will face swifter dismissal. This places a premium on rigorous pre-filing preparation. For resolution applicants, the clarified treatment of related-party claims changes the risk calculus when evaluating distressed assets — particularly in cases where intercompany transactions form a significant part of the balance sheet.
We advise clients to conduct a thorough pre-bid review of related-party exposures before submitting resolution plans, and to engage early with the resolution professional to understand the scope of claims that will be admitted against the corporate debtor.
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