IBBI 2026 Liquidation Framework: Faster & Transparent

Overview on Amendments to the IBBI Liquidation Regulations (2026)

The document proposes major changes to India’s liquidation framework under the Insolvency and Bankruptcy Code (IBC) following the Insolvency and Bankruptcy Code (Amendment) Act, 2025. key amendments (such as Section 34A and Section 35(2) of the Code) for granting supervisory powers to the CoC in the liquidation process. The overall objective is to make liquidation faster, more creditor-driven, and aligned with the new statutory timeline of 180 days. The following key objectives are amendments to the IBBI Liquidation Regulations (2026):

• Complete liquidation within 180 days.
• Give the Committee of Creditors (CoC) a central supervisory role during liquidation.
• Eliminate duplicate claim verification processes.
• Rationalize liquidator fees.
• Improve transparency and accountability.
• Enable replacement of liquidators.
• Facilitate transfer of guarantor assets.
• Ensure continuity of avoidance and recovery proceedings even after dissolution.

Major Changes in Amendments to the IBBI Liquidation Regulations (2026)

CoC Replaces Stakeholder Consultation Committee

• The CoC formed during CIRP will continue during liquidation.
• The existing Stakeholder Consultation Committee (SCC) framework is removed.
• CoC will exercise oversight and approve key liquidation decisions.

New Liquidation Timeline

• Liquidation must be completed within 180 days from commencement.
• The Adjudicating Authority may extend this period by up to 90 days.
• Model timelines are revised accordingly.

Simplified Claims Process

• Claims already verified during CIRP will automatically continue into liquidation.
• Only new claims or updates to existing claims need to be submitted.
• Creditors must update claims if they receive recoveries after liquidation begins.

Revised Liquidator Fee Structure

• The existing realization and distribution-based fee model is replaced.
• Fees may be paid:
  • As a monthly fee during liquidation, or
  • As a percentage of distributions to stakeholders.
• Changes reflect reduced work due to elimination of fresh claim verification.

Greater CoC Control

The liquidator must obtain CoC approval for:

• Appointment of professionals.
• Liquidator remuneration.
• Major litigation decisions.
• Valuations.
• Liquidation costs.
• Asset sale strategies and auction-related decisions.
• Assignment of difficult-to-sell assets.

Replacement of Liquidator

• CoC may replace the liquidator with a 66% voting share.
• An application must be filed before the Adjudicating Authority.
• The existing liquidator continues until replacement is approved.

Transfer of Guarantor Assets

• New Regulation 8A enables transfer of assets of a corporate guarantor undergoing liquidation to support the CIRP of the principal borrower.
• Such transfers require CoC approval.

Reporting Simplification

• Multiple reports to the Adjudicating Authority are consolidated.
• Progress reports will include:
  • CoC meeting minutes,
  • Asset memorandum,
  • Sale reports,
  • Status of legal proceedings and costs.

Asset Sale Restrictions

• Assets cannot be sold to persons ineligible under Section 29A.
• Related parties, liquidator relatives, and appointed professionals face additional restrictions on purchases.

Clarification on Not Readily Realisable Assets (NRRA)

• NRRAs include contingent, disputed, or avoidance-related assets even if not yet crystallized.
• Such assets may be assigned or transferred.

Dissolution and Ongoing Proceedings

• Avoidance transactions, fraudulent trading cases, and recovery suits can continue even after dissolution.
• CoC will decide how such proceedings are pursued and proceeds distributed.

Security Interest Changes

• Secured creditors must inform the liquidator within 14 days whether they relinquish security. Timelines for related payments are prescribed.

Treatment of Unremitted TDS/TCS

A significant clarification is proposed: TDS/TCS deducted or collected by the corporate debtor before liquidation but not yet remitted to the government will be treated as third-party trust assets. Such amounts will not form part of the liquidation estate. The proposal follows the NCLT Bengaluru ruling in New Age Real Properties LLP v. Bhuvana Infra Projects Pvt. Ltd. (04.09.2025).

Practical Takeaway for Insolvency Professionals  

The amendments fundamentally transform liquidation from a liquidator-centric system to a creditor-driven (CoC-driven) system. The major themes are time-bound liquidation (180 days), continuation of CoC throughout liquidation, reduced duplication in claim verification, enhanced creditor oversight, provision for replacement of liquidator, protection against conflict-of-interest sales, clarity on TDS/TCS treatment, and better realization and recovery mechanisms.

From an insolvency professional & insolvency advisory perspective, the most impactful changes are the 180-day liquidation mandate, CoC supervision, and exclusion of unremitted TDS/TCS from the liquidation estate, as these will directly affect recoveries, stakeholder priorities, and liquidation strategy

Overall Impact

The amendments fundamentally transform liquidation from a liquidator-led process into a CoC-supervised process, reduce duplication of work, shorten timelines, strengthen creditor control, improve transparency, and clarify treatment of key issues such as guarantor assets, avoidance proceedings, and unremitted tax deductions