OPINION | Insolvency process needs to be retooled to meet the resolution deadline

In insolvency, it is the will combined with the most effective and fastest way that truly delivers.

The Insolvency and Bankruptcy Code, 2016 (Code) is designed to deliver time-bound corporate resolutions that maximize value, preserve viable businesses, and balance stakeholder interests.

“Will” and “Way”

It is a presumption that the stakeholders initiating the Corporate Insolvency Resolution Process (CIRP) proceed with the “Will” to reorganize a corporate debtor who is struggling financially, in a time-bound manner, aiming at maximizing asset value, promoting entrepreneurship, preserving credit availability, and balancing stakeholder interests. The real challenge, however, lies not in willingness or formal knowledge of the process, but in whether the pathway, the “Way” functions as intended in practice. 

According to published data by IBBI in its quarterly newsletter (July-September 2025), the average time taken for approximately 1,300 resolved CIRPs was 603 days, even after excluding periods formally carved out by adjudicating authorities for litigation and other delays. 

Why Delays Happen Despite Willingness and Clarity of Process. 

The sources of delay are diverse and interlocking. Some are systemic, others tactical, and many are process-driven. 

Strategic Litigation: Strategic litigation plays a conspicuous role. Not all stakeholders welcome insolvency proceedings, particularly promoters who stand to lose control over the corporate debtor once CIRP commences. Appeals, interim applications, proposals for settlement at late stages, and challenges to bidding process, bid documents, qualification and eligibility of Resolution Applicants, valuations, Approved Resolution Plans, etc. are often used to halt momentum. Other than promoters, even unsuccessful resolution applicants and certain creditors also resort to Appellate processes to contest outcomes, further drawing out timelines. 

Procedural non-compliance: Although the I&B Code and regulations made thereunder set clear timelines for each stage, slippage occurs for various reasons, ranging from delays in collation and verification, preparation of information memorandum, extension in timelines to submit bids for one reason or another, etc. Each deviation compounds overall delay and invites additional disputes. 

Lack of adjudicatory infrastructure: Heavy cause lists, limited benches (of both Ld. NCLT and Ld. NCLAT), and the breadth of matters (ranging from I&B Code, Company matters, CCI, etc.) before these forums elevate pendency. Even routine applications face adjournments, while final hearings on intricate issues demand significant time. 

Inconsistent Interpretations: The inconsistent interpretations across benches create legal uncertainty. Divergent views on the same question of law or process often increase appeals, delaying finality and clarity. Until interpretation is settled by Hon’ble Supreme Court, practitioners face unpredictability and duplication of effort. 

Delay on the part of Committee of Creditors (CoC): Often, delays arise within the commercial decision-making framework of CoC. The CoC at times struggles to reach consensus, and in pursuit of higher value re-run parts of the processes, including issuing fresh invitations to bid, asking for revised bids, etc. 

Statutory approvals: Though exceptions have been given for seeking various approvals for the Corporate Debtors in CIRP or to successful resolution applicants, there are still a few prior approvals which are required to be undertaken, like from CCI. Seeking these approvals also delays the process. 

What Could Improve Outcomes 

Not every delay is susceptible to legislative or regulatory correction. However, more stringent adherence to timelines and stronger consequences for non-compliance will result in better process flow. Compared to Intellectual Property regimes where missed deadlines can irreversibly forfeit rights, CIRP timelines should at least carry consequences that cannot be neutralized by routine applications for exclusion. 

Further, additional benches and members, streamlined case management is essential to clear backlogs and forestall avoidable adjournments. Similarly, harmonized interpretations of recurring legal questions would reduce Appellate burden. While the committee of creditors must extract value, iterative bid re-runs that extend beyond statutory windows often destroy more value than they create, so such bid re-runs should be discouraged. 

Conclusion: The “Will” Needs an Effective “Way” 

A successful CIRP requires more than intent or procedural familiarity. The longer the process runs, the greater the risk of asset decline, higher costs, contested outcomes, and, in many cases, liquidation. In insolvency, it is not merely the will and the way that matter; it is the will combined with the most effective and fastest way that truly delivers. 

The Code’s promise remains intact: a fast, predictable pathway that maximizes value and preserves viable enterprises. But to deliver on that promise, time must become a hard constraint rather than a flexible parameter.

Parliamentary Committee’s suggestions

Recently, on 2^nd December 2025, the Twenty Eighth Parliamentary Standing Committee report (Review of Working of Insolvency and Bankruptcy Code and Emerging Issues) was tabled by Bhartruhari Mahtab before Lok Sabha wherein various observations/recommendations have been proposed ranging from efficacy and post resolution challenges i.e. to issue online no dues certificates and statutory clearances immediately on completion of resolution plan and penalizing non-compliance if any.

# To avoid delays, backlogs, it has been recommended to establish additional benches and to have integrated technology platform (iPIE) for centralized case management, mandatory upfront threshold deposit if any unsuccessful resolution applicant is filing an appeal and minimum penalty for frivolous applications.

# To increase creditor realization as well as to reduce haircuts, it is recommended to move from valuing assets based on liquidation value to value assets on enterprise value to better reflect the corporate debtor’s potential and encourage competitive bidding through global outreach to enhance competition.

# Another recommendation is w.r.t introducing an advance ruling mechanism like it is present in taxation so that stakeholders have preadmission clarity on key legal or factual issues, which will also reduce unnecessary litigation and help in safeguarding the time bound nature of the resolution process.

# Mediation has also been proposed to reduce burden on Adjudicating Authorities.

# The Committee also agreed to the suggestion of IBBI to formulate adjudicating authority rules to provide clarity as to fixed timelines and enhance the role of registry. Furthermore, to deal with the situation of no to bare minimum share in resolution by MSME and/or Operational Creditors, it is also recommended that the waterfall mechanism be reviewed to strike a better balance, maximizing value and also to avoid unnecessary challenges often made by these stakeholders which delays the process.  

With firmer timelines, stronger adjudicatory infrastructure, and more consistent decision-making by both tribunals and creditors, CIRP can move from slow attrition to swift resolution. In insolvency, slow and steady does not win the race; swift and certain does. 

(Daizy Chawla, Senior Partner at S&A Law Offices.)

Views are personal and do not represent the stand of this publication.