The notification also brought into force the provision dealing with government dues, which would get lower priority than secured creditors, and a streamlined liquidation process.
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The Insolvency and Bankruptcy Code (Amendment) Act, 2026, was notified on April 6 after parliamentary clearance to the relevant bill and presidential assent. The amendments aimed to expedite the resolution of bankrupt firms and prevent erosion of stressed asset value. The amendments, the first since 2021 and the seventh since the law’s inception in 2016, introduce new concepts and streamline existing processes to reduce delays in resolving insolvent companies that erode asset value, experts said.
Srinivasa Rao, senior partner-risk advisory services at Nangia Global, said under the amended law, lenders hold the highest priority when it comes to cash distribution. “If the corporate entity’s assets are liquidated, banks are legally entitled to be cleared first from the proceeds of the sale because they hold a registered charge on the land or structure,” he said. As per the amended law, the National Company Law Tribunal (NCLT) will admit an insolvency resolution case in 14 days, failing which it has to formally state the reasons.
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Just proof of default would be enough to admit a case and the NCLT need not delve into supplementary issues. The National Company Law Appellate Tribunal (NCLAT) will dispose of appeals within three months. Delayed admission has been a key factor in prolonged resolution timelines. Between April and December 2025, the average resolution time rose to 764 days, excluding periods exempted by the NCLT, compared with 597 days as of March 2025.