Companies going through insolvency proceedings may soon have multiple resolution plans for different assets or business units.
The Lok Sabha Select Committee examining the Insolvency and Bankruptcy (Amendment) Bill, 2025 last week recommended explicitly allowing such an approach and moving away from the current system that only allows for a single, consolidated solution.
The aim is to allow the sale of individual assets or business verticals of companies with diversified operations instead of forcing a single consolidated resolution, according to a statement issued by the committee on December 17, available on the Lok Sabha website.
The panel said this could help maximize value realization and attract a wider pool of bidders.
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Insolvency administrators and lawyers said the proposal represents an evolutionary shift in India’s insolvency regime, making it more market-oriented and commercially flexible.
“Allowing for multiple resolution plans marks a significant evolution of the Insolvency and Bankruptcy Code 2016, moving it from a rigid, single consolidated resolution scheme to a more flexible and market responsive framework,” said Abhinav Agnihotri, partner at Kochhar & Co.
According to Yogendra Aldak, managing partner at Lakshmikumaran & Sridharan Attorneys, the proposed amendment will allow strategic buyers to selectively offer assets or business units in line with their core competencies.
“This would allow for more accurate and commercially realistic pricing as bidders can focus on the intrinsic value of specific businesses instead of discounting risks at the group level,” Aldak said.
How the current mode works
Under the current Insolvency and Bankruptcy Code (IBC) framework, while resolution plans can be submitted by multiple bidders, the Committee of Creditors (CoC) can only approve one final plan for the corporate debtor as a whole.
The plan has to be resolved by the company as a going concern and once approved by the National Company Law Tribunal (NCLT), it becomes binding on all stakeholders.
Courts consistently emphasize finality, and the law knows no back-up or alternative plans. If the approved plan is later canceled or fails to implement, the insolvency process may have to be restarted or go into liquidation.
The panel’s recommendation comes as the courts have thrown out several major resolution plans, exposing weaknesses in a single plan.
The most prominent example is Jet Airways, where the Supreme Court struck down the resolution plan after long delays and non-implementation, including non-deposit. ₹350 crore as planned.
In the Bhushan Power & Steel case, the Supreme Court first struck down JSW Steel’s ₹19,700 crore resolution plan for not meeting deadlines, although the decision was later reviewed, allowing JSW to retain the company.
Similarly, in Hindustan National Glass, the Supreme Court grossly overruled ₹2,250 million resolution plan approved in favor of AGI Greenpac, citing legal deficiencies in the resolution process.
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Nudge is already underway
The proposed legislative change builds on a regulatory nudge from earlier this year. In May 2025, the Insolvency and Bankruptcy Board of India (IBBI) notified the CIRP (Fourth Amendment) Regulations, 2025, which introduced the concept of partial resolution of a corporate debtor. CIRP is the process of resolving the insolvency of a company.
According to the amended regulations, the resolution professional can – with the approval of the creditors’ committee – invite bids simultaneously for the company as a whole, for one or more of its assets or business units, or for both.
The aim of the move was to shorten timelines, prevent value erosion in viable business segments and widen investor participation, particularly from strategic buyers unwilling to take group-level risks.
Resolution and liquidation
According to the Insolvency and Bankruptcy Board of India (IBBI) Newsletter (July-September 2025), the IBC has resolved around 1,300 corporate insolvencies through approved resolution plans, while 2,896 cases have ended in liquidation.
Creditors realized around ₹3.99 trillion under resolution plans, about 32.4% of claims awarded but over 170% of liquidation value. Resolution processes took an average of 603 days to complete.
Lawyers said the proposed change could strengthen the CoC’s bargaining leverage and improve debt collection.
Role of the RFRP
Insolvency experts noted that the Request for Resolution Plan (RFRP) – issued by a resolution professional – will remain central. The RFRP may preserve the CoC’s right to adopt flexible evaluation methods, including consideration of multiple plans in parallel.
“Having more than one plan does not weaken price discovery, rather it can enhance competition provided the asset profile and viability of the business supports such interest,” said Mukesh Chand, senior counsel at the Economic Laws Practice. He added that multiple plans could act as an insurance policy if one plan was attacked later.
However, the committee’s recommendations do not clarify whether multiple plans could be preserved as formal backup options if the approved plan is later set aside by the courts.
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“Allowing multiple resolution plans should not be coupled with the creation of a formal ‘backup plan’ mechanism,” cautioned Aldak.
“IBC jurisprudence consistently emphasizes finality once a plan is approved by the CoC and decision-making body. Unless the law provides otherwise, keeping an alternative plan in reserve remains legally uncertain.”
Mohit Adatiya, director of NPV Insolvency Professionals, warned of the potential risks.
“If implemented with proper safeguards, this approach can improve value and returns. But without clear safeguards, it could encourage stronger asset selection while weaker businesses remain unresolved,” he said.
