India is at an inflection point in its economic journey. As the country aspires to become the world's third-largest economy, the strength and credibility of its legal and institutional infrastructure will be as important as the growth numbers themselves. One of the most significant — and often underappreciated — developments of the past decade has been the transformation of India's insolvency and bankruptcy framework. The Insolvency and Bankruptcy Code, 2016 ("IBC") marked a fundamental break from a past in which creditors had little recourse, value was systematically destroyed, and delay was the dominant strategy. A decade on, it is worth taking stock of what has been achieved, what has gone wrong, and what the next chapter must look like.
Ten years ago, India had no single, coherent law for dealing with corporate insolvencies. If a company could not pay its debts, creditors had to navigate a maze of civil courts, debt recovery tribunals, and winding-up proceedings that could stretch anywhere from six to ten years before a single rupee was recovered. By then, the company had lost most of its value, its employees had left, and whatever remained was worth a fraction of the original. The system, perversely, rewarded delay. Those who could drag a case out the longest had the best chances of getting away.
The Insolvency and Bankruptcy Code, enacted in 2016, was designed to change all of that. It consolidated fragmented laws into a single framework, set time limits, created specialised tribunals, and empowered creditors. Most importantly, it changed the fundamental philosophy — from a liquidation mindset, where the goal was to break up a company and sell its pieces, to a rescue mindset, where the goal is to save the company as a going concern, preserve jobs, and maximise value for all stakeholders.
The Progress Is Real
The numbers tell a story worth telling. Recovery rates in scheduled commercial banks have approximately doubled — from 13.2% in FY2018 to 26.2% in 2025. In December 2025, S&P Global Ratings formally upgraded India's insolvency regime from "Group C" — their lowest category — to "Group B," noting that average recovery rates have improved from 15–20% under the old regime to approximately 30% under the IBC, and that resolution timelines have come down from six to eight years to about two years.
As of December 2025, approximately 4,002 corporate debtors have been resolved under the IBC, with the value recovered in resolved cases yielding more than 171% of the liquidation value — meaning creditors are recovering significantly more through the resolution process than they would have through liquidation. Resolution plans are on average yielding around 95% of the fair value of the corporate debtor. These are real businesses saved, real jobs protected, and real money returned to the banking system.
The Cases That Built the Law
The IBC did not arrive with all the answers. The Supreme Court has built the jurisprudence case by case. In Innoventive Industries v. ICICI Bank, the Court held a clear principle: to admit an insolvency petition by a financial creditor, the NCLT only needs to be satisfied that there is a debt and that the corporate debtor has defaulted. Nothing more. In Essar Steel, the Supreme Court upheld the primacy of commercial decision-making by the Committee of Creditors, holding that as long as the provisions of the IBC are followed, it is the commercial wisdom of the majority of the CoC that must prevail — courts will not second-guess business decisions.
Also from the Essar Steel line of cases, and reinforced in Ghanshyam Mishra, the Supreme Court established the clean slate principle — that when a resolution applicant acquires a company through the IBC process, old liabilities, old claims, and old disputes do not follow the company into its new life. This principle is essential for attracting investors into distressed situations.
On the international stage, the Jet Airways case was a milestone — the first cross-border insolvency protocol in India's history, involving parallel proceedings in India and the Netherlands, where a negotiated protocol was approved by both the NCLAT and the Dutch Bankruptcy Court, recognising India as the main insolvency proceedings.
The Challenges That Remain
Despite the progress, significant challenges persist. The law requires the entire resolution process to be completed within 330 days. The reality is that the average is now 853 days — more than double the legal limit. The NCLT's 30 benches currently carry a backlog of nearly 30,600 cases, with an estimated clearance time of close to ten years at current disposal rates.
There are also unresolved questions of law. The Vidarbha Industries judgment introduced uncertainty about whether admission of an insolvency petition upon proof of default is mandatory or discretionary — unsettling the framework the IBC was built on. The Rainbow Papers judgment disrupted the IBC's carefully designed liquidation waterfall by treating certain Government dues as secured debt ranking equally with secured financial creditors.
Parliament has responded with the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, currently before Parliament, which seeks to address several of these uncertainties — including restoring the mandatory admission framework, clarifying the rights of dissenting creditors, and reaffirming the priority of secured financial creditors over Government dues in the liquidation waterfall.
The Opportunity Ahead
India's insolvency system is young — ten years old in legal terms. The institutions that support it — the NCLT, the IBBI, the insolvency professional community, and the insolvency bar — are all still being shaped and built. Compared to more mature jurisdictions, where early intervention mechanisms are available and pre-packaged plans can be approved in days, there is a considerable distance yet to travel.
But the trajectory is unmistakable. A system that once rewarded delay and destroyed value has been transformed into one that is increasingly recognised — by global rating agencies and the market alike — as a credible, functioning framework. The task now is to close the remaining gap: to build the culture, the standards, and the habits of a profession worthy of the system it serves.
Conclusion
The IBC's first decade has demonstrated that institutional reform, when designed with clarity of purpose and backed by a determined judiciary and legislature, can produce measurable results. Recovery rates have doubled. Resolution timelines have fallen sharply. India has earned a place on the global insolvency map. But the work is far from complete. Delays that stretch to twice the statutory limit, judicial uncertainty on core questions, and an overburdened tribunal system are not merely operational challenges — they are threats to the credibility of the framework itself. The pending Amendment Bill offers an opportunity to correct course legislatively. The more enduring task, however, is cultural: building a profession and a set of institutions whose conduct, standards, and judgement are equal to the ambitions of the law they serve. India's insolvency revolution is real. Whether it endures will depend on the choices made in the decade ahead.
(L Viswanathan is a Partner at Cyril Amarchand Mangaldas.)