30 July 2026
The Insolvency and Bankruptcy Board of India (“IBBI”) has released a Discussion Paper proposing targeted amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”), the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, the IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 (“PG to CD Regulations”), and the IBBI (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”). While the proposals do not seek to overhaul the insolvency framework, they aim to address procedural ambiguities, enhance transparency, and align the subordinate legislation with the Insolvency and Bankruptcy Code (Amendment) Act, 2026. The proposals focus on four key areas: valuation in CIRP, the consequences of the removal of interim moratorium for personal guarantors, the role of the Resolution Professional (“RP”) pending withdrawal applications under Section 12A, and simplification of stakeholder modifications during liquidation.
PROPOSED REFORMS
Enhancing Transparency in the Valuation Process
One of the most significant proposals relates to the appointment and functioning of registered valuers appointed under Reg. 27(1) of CIRP Regulations. Under the existing framework, the RP independently appoints two registered valuers without any involvement of the Committee of Creditors (“CoC”). The IBBI proposes that such appointments should require the prior approval of the CoC. In addition, valuers would be required to submit their valuation reports by the last date for receipt of resolution plans, with the reports remaining confidential until the plans are received and opened before the CoC. The proposal also seeks to remove the requirement of disclosing the fair value in the Information Memorandum.
From a governance perspective, involving the CoC in the appointment process is intended to improve stakeholder confidence and reduce disputes regarding the independence of valuers. However, this proposal also raises an important question of institutional independence. Since the RP acts as an officer of the insolvency process rather than an agent of the creditors, permitting the CoC to approve appointments may blur the distinction between independent administration and creditor control.
The proposal to defer disclosure of valuation reports until the resolution plans have been received is commercially significant. By preventing bidders from anchoring their bids around an indicative fair value, the IBBI seeks to encourage genuine market-driven price discovery. This approach is broadly consistent with the objective of value maximisation under the IBC and may reduce strategic bidding behaviour.
Consequences of the Removal of Interim Moratorium for Personal Guarantors
The Discussion Paper also proposes consequential amendments following the IBC (Amendment) Act, 2026, which removed the automatic interim moratorium available to personal guarantors to corporate debtors under Sections 96 and 124 of the IBC. The proposed regulations require applicants to formally notify the opposite party, in writing, within thirty days of commencement of the amending regulations, that the interim moratorium no longer applies by virtue of the newly inserted sub-section (4) to Section 96 or Section 124 and expressly clarify that creditors may continue or initiate recovery proceedings in respect of applications that were pending on 26 May 2026.
These amendments primarily serve a clarificatory function. Nevertheless, they are expected to significantly reduce procedural uncertainty and discourage the misuse of insolvency proceedings solely as a mechanism to stall enforcement actions. The proposals reinforce the legislative intent behind the 2026 Amendment Act, which sought to eliminate the “pre-admission shield” that had often delayed legitimate recovery efforts.
At the same time, the removal of interim protection represents a notable shift in the balance between creditor rights and debtor protection. Personal guarantors may now face parallel recovery proceedings even before the admission of insolvency applications, increasing the practical importance of timely adjudication by the NCLT.
Clarifying the RP’s Role During Section 12A Withdrawal
The IBBI has proposed an explicit clarification that the RP must continue to discharge all statutory responsibilities until the Adjudicating Authority finally disposes of an application for withdrawal under Section 12A of the IBC.
Although this position was already implicit in the existing statutory framework, uncertainty had arisen in practice regarding the RP’s duties once the CoC approved a withdrawal. The proposed clarification is therefore welcome as it eliminates ambiguity and ensures continuity of the insolvency process.
From a practical standpoint, this amendment prevents a regulatory vacuum. Until the withdrawal application is judicially approved, the CIRP remains legally in force, and any suspension of the RP’s functions could adversely affect asset preservation, compliance obligations, and stakeholder interests.
Modification of entries in the list of stakeholders
The final proposal concerns modifications to the list of stakeholders during liquidation. Presently, even minor corrections require the liquidator to approach the Adjudicating Authority. The IBBI proposes to remove this requirement in light of the changes introduced by the Amendment Act, which now provides for a CoC during liquidation.
This amendment reflects a broader policy objective of reducing judicial intervention in routine administrative matters. By allowing liquidators to update stakeholder entries without seeking prior approval from the NCLT, the proposal is expected to reduce unnecessary litigation, lower costs, and expedite liquidation proceedings.
However, given that modifications to stakeholder claims can directly affect distribution priorities, it may be prudent for the final regulations to incorporate procedural safeguards such as mandatory notice to affected stakeholders and an opportunity to raise objections before material changes are implemented.
A BROADER REGULATORY SHIFT
Viewed collectively, the proposals indicate a clear regulatory trend. Rather than introducing sweeping substantive reforms, the IBBI is focusing on improving procedural efficiency, enhancing transparency, and reducing avoidable litigation. The Discussion Paper also demonstrates a conscious effort to align the regulations with the legislative reforms introduced through the IBC (Amendment) Act, 2026.
Several proposals, particularly those concerning valuation confidentiality, liquidation administration, and the role of the RP, are likely to improve operational efficiency. Others, such as the requirement for CoC approval in appointing valuers, invite important debate regarding the appropriate balance between creditor oversight and the independence of insolvency professionals.
CONCLUSION
The Discussion Paper represents another step in the continuous evolution of India’s insolvency framework. While none of the proposed amendments fundamentally alter the architecture of the IBC, they seek to address recurring procedural challenges that have emerged through implementation over the past decade. If adopted with appropriate safeguards, these amendments are likely to strengthen stakeholder confidence, reduce procedural delays, and promote greater certainty in insolvency proceedings.
As the IBC matures, the emphasis is increasingly shifting from legislative reform to regulatory refinement. The success of these proposals will ultimately depend on whether they can enhance efficiency without compromising the independence, transparency, and fairness that remain the cornerstone principles of India’s insolvency regime.
