RETHINKING THE INSOLVENCY AND BANKRUPTCY LAWS IN INDIA
AUTHOR -SNEHAL EKKA* & AKANKSHA SRIVASTAVA**
* FINAL YEAR LAW STUDENT AT CHRIST UNIVERSITY, PUNE LAVASA CAMPUS
** ASSISTANT PROFESSOR AT CHRIST UNIVERSITY, PUNE LAVASA CAMPUS
BEST CITATION – SNEHAL EKKA & AKANKSHA SRIVASTAVA*A, RETHINKING THE INSOLVENCY AND BANKRUPTCY LAWS IN INDIA, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (7) OF 2026, PG. 244-251, APIS – 3920 – 0001 & ISSN – 2583-2344.
ABSTRACT
One of the single largest economic reforms of the post-independence era of India is the Insolvency and Bankruptcy Code, 2016 (‘IBC’). It was passed in an attempt to unify the previously scattered insolvency law regime and institute a time-bound, creditor-controlled resolution regime. It has certainly helped transform India’s credit culture and ranking in the world’s Ease of Doing Business ranking.[1] Nearly a decade later into its operation, three structural gaps persist with long-lasting impact: the institutional marginalization of operational creditors through their category-specific exclusion from the Committee of Creditors[2]; the ease with which the Section 14 moratorium is manipulated so as to negate the objective of business continuity[3]; and the near-total vacuum of a mechanism dealing with environmental liabilities in an insolvency process.[4] Each of these three lacunae is subjected to a thorough doctrinal examination, and located in the existing academic literature. An in-depth comparison is drawn between the IBC and the United States Bankruptcy Code (Chapter 11) and United Kingdom’s Insolvency Act 1986 and Corporate Insolvency and Governance Act 2020. The latter two regimes feature developed tools – such as cramdown, bad faith stay-relief doctrine, monitor function, and environmental successor liability – which may serve as blueprints for addressing the three structural deficits of the IBC.[5] The paper concludes with concrete reforms targeting legislative amendment, judicial adjustments, and institutional capacity building, stating that continued commitment to the IBC’s fundamental purpose necessitates remedying these three deficiencies with the same rigor used in its creation.
Keywords: Insolvency and Bankruptcy Code, Financial Creditors, Operational Creditors, Moratorium, Green Insolvency, CIRP, IBC 2016.
[1] “From distress to development: the ibc and india’s economic future,” Aug. 2025, doi: 10.5281/zenodo.16991598.
[2] A. Baxi, “Interim Finance in Creditor-Oriented Bankruptcy Codes: A Study in the Context of Insolvency & Bankruptcy Code, India,” Vikalpa, pp. 025609092211506–025609092211506, Feb. 2023, doi: 10.1177/02560909221150689.
[3] A. Babu and S. Choudhury, “A Critical Analysis of Insolvency and Bankruptcy Law in India”, [Online]. Available: http://iciset.in/Paper2067.pdf
[4] Jean-Michel Sahut et al., What Relation Exists Between CSR and Longevity of Firms?, 17 Int’l J. Bus. 152 (2012).
[5] Insolvency Regime in India and USA: A Comparative Study, SCC ONLINE BLOG (Sept. 19, 2023),
https://www.scconline.com/blog/post/2023/09/19/insolvency-regime-in-india-and-usa-a-comparative-study/