Overview

• The bill was tabled in the Lok Sabha on August 12 and referred to a select committee, proposing 14-day windows for NCLT decisions on new insolvency applications and 30-day rulings on withdrawal requests
• Section 12A withdrawals will require Committee of Creditors approval within a limited post-formation window and will be barred before CoC formation or after the first plan invitation
• A new out-of-court mechanism allows financial creditors holding at least 51% of debt to initiate insolvency outside tribunals, subject to debtor objections and potential CIRP conversion
• Tribunals will gain explicit authority for partial asset sales and a 120-day ‘second chance’ to consider fresh resolution plans after the 330-day CIRP limit, contingent on creditor consent
• The amendment reorders claim priorities to demote recent government dues, removes interim moratorium protection for personal guarantors and highlights concerns over NCLT bench readiness and implementing regulations