Resolution professional can now invite interim finance providers to CoC meetings

The Insolvency and Bankruptcy Board of India (IBBI) has introduced significant changes to the corporate insolvency framework by notifying the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025. The amendment regulations, which came into effect on May 26, aim to streamline the insolvency resolution process and enhance its effectiveness by giving more powers to Committee of Creditors or CoC.

The amendments are designed to improve flexibility, transparency, and efficiency in resolving distressed corporate assets. Below are the key highlights:

1. Part-wise Resolution of Corporate Debtors Enabled
Under the new framework, resolution professionals, with the approval of the Committee of Creditors (CoC), can now invite expressions of interest (EOIs) for resolution plans either for the entire corporate debtor or for specific assets, or both. This concurrent approach is expected to reduce delays, preserve value in viable segments, and attract a wider pool of potential investors.

2. Harmonized Payment Timelines for Dissenting Creditors
In cases where resolution plans provide for staged payments, financial creditors who voted against the plan must be paid at least on a pro rata basis and ahead of those who supported it, at each payment stage. This ensures fair treatment of dissenting creditors while accommodating the practicalities of phased payment structures.

3. Enhanced Role for Interim Finance Providers
The CoC has been empowered to direct resolution professionals to invite interim finance providers to attend CoC meetings as observers. Though they will not have voting rights, their participation is expected to offer better insight into the debtor’s condition, enabling more informed funding decisions.

4. Mandatory Presentation of All Plans to CoC
Resolution professionals are now required to present all resolution plans received—including those that are non-compliant—to the CoC, along with relevant details. This move aims to improve transparency and empower creditors with comprehensive information for decision-making.

The IBBI said these reforms are intended to make the corporate insolvency resolution process more robust and responsive, ultimately promoting better outcomes for creditors and stakeholders alike.

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