India’s Insolvency Evolution: From A Fragmented Past To A Creditor-Centric Future
India’s insolvency laws have moved from a complex, debtor-friendly system to a simpler, creditor-focused approach with the Insolvency and Bankruptcy Code (IBC). The 2026 Amendment Act builds on the 2016 IBC to fix problems like delays and misuse, aiming for quicker and more effective resolutions. The Old Insolvency Regime Before the IBC came in 2016, India’s insolvency system used several old laws that mainly helped debtors instead of helping creditors recover money. This often led to long delays and lower asset values. Key laws included the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), which allowed the Board for Industrial and Financial Reconstruction (BIFR) to declare companies “sick” and pause legal actions for years, though these efforts rarely succeeded. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) let secured creditors recover assets without going to court, but it only covered certain...