A law can set a deadline. It cannot make a court meet one.
The Insolvency and Bankruptcy Code, 2016 gives a company in distress 330 days to be resolved. IBBI data as on 31 March 2026 shows that resolution plans have in practice taken an average of around 621 days — close to double. That gap is the central fact about the IBC in its tenth year, and it is the honest starting point for any assessment of it.
On 20 September 2026 the Indian Institute of Corporate Affairs (IICA), Manesar, held two sessions under its 'Meet the Legend' programme that between them cover the two things worth knowing about the Code now: how it has changed, and where it collides with another law.
The Code, in the form questions take
The IBC was enacted on 28 May 2016. Before it, an insolvent Indian company was dealt with under a scattered set of instruments — the Sick Industrial Companies Act and its BIFR, the SARFAESI Act, debt recovery tribunals, winding-up provisions of the Companies Act — with overlapping jurisdictions and no single time-bound process. The Code consolidated them.
The institutions:
- NCLT — the National Company Law Tribunal, the adjudicating authority for corporate insolvency
- NCLAT — the National Company Law Appellate Tribunal, which hears appeals; further appeal lies to the Supreme Court
- IBBI — the Insolvency and Bankruptcy Board of India, the regulator, established on 1 October 2016
- Insolvency Professionals, licensed by IBBI, who run the process
The process — CIRP. Once the NCLT admits an application, the Corporate Insolvency Resolution Process begins. The existing management is displaced and a Resolution Professional takes over the company as a going concern. A Committee of Creditors (CoC), composed of financial creditors, is constituted. Resolution applicants submit plans. The CoC approves a plan by a vote of at least 66 per cent of voting share, and the NCLT then approves it. If no plan is approved, the company goes into liquidation.
The timeline. 180 days, extendable by 90 days, with a statutory outer limit of 330 days including time consumed by litigation.
Section 53 — the waterfall. In liquidation, proceeds are distributed in a statutory order of priority. The broad sequence to remember: insolvency resolution process costs first, then workmen's dues for 24 months together with secured creditors who have relinquished security, then employee wages, then unsecured financial creditors, then government dues together with the remaining secured creditors, then other remaining debts, then preference shareholders, then equity shareholders last.
Two features of that order carry the Code's whole philosophy. Workmen rank alongside secured creditors — a deliberate policy choice, not an accident. And equity ranks last, which is the formal expression of the idea that the people who owned the company bear the first loss.
Section 29A. Certain persons are barred from submitting resolution plans — wilful defaulters, undischarged insolvents, and persons connected to the corporate debtor. Its purpose is to prevent a promoter who ran a company into the ground from buying it back at a discount to the debt they themselves created. It is among the most consequential amendments the Code has received.
Section 32A. Once a resolution plan is approved, the corporate debtor ceases to be liable for offences committed before the start of CIRP, and its assets cannot be attached in respect of those offences — while the individuals responsible remain fully liable. The reasoning is commercial: no bidder will pay for a company that may have its assets seized the day after acquisition for something the previous management did. Without Section 32A, resolution of a company tainted by fraud becomes impossible, and the creditors — including public banks — recover nothing.
Amendment as design, not repair
Dr M.S. Sahoo, former Chairperson of the IBBI, addressed the first session on 'IBC as an Evolving Law Through the Amendments', and made a point worth more than its brevity suggests: markets evolve faster than litigation can keep pace with, which makes subordinate legislation and regulatory mechanisms important instruments for responding to emerging situations.
That is an argument about the architecture of economic law, and it is worth understanding rather than noting.
A statute is amended by Parliament — slowly, and with a full political process. Subordinate legislation — regulations made by a regulator such as IBBI under powers delegated by the Act — can be issued in weeks. An economic law governing a live market therefore does most of its actual adapting through regulations rather than through amendments to the parent Act.
He also framed this as experimentation in economic laws: economic legislation must evolve continuously in response to changing market realities, rather than being settled once and left. The IBC is the clearest Indian example, having been amended repeatedly in its first decade — Section 29A, the treatment of homebuyers as financial creditors, the pre-packaged insolvency route for MSMEs, and thresholds adjusted during the pandemic.
The trade-off deserves stating, because a complete answer needs it. Frequent amendment keeps a law current and makes it unpredictable. Every amendment generates fresh litigation about its scope, and litigation is precisely what pushes a 330-day process to 621 days. A law that adapts quickly and a law that resolves quickly are, to some extent, in tension.
Where the IBC meets the PMLA
The second session, delivered by Shri Balesh Kumar, Member of the Appellate Tribunal (PMLA, FEMA, PBPTA, NDPSA and SAFEMA), examined the PMLA-IBC interface.
The Prevention of Money Laundering Act, 2002 is India's principal anti-money-laundering statute, enforced by the Enforcement Directorate. Its mechanics, as set out in the session:
The three stages of money laundering — the standard framework, and the most examinable item here:
- Placement — introducing illicit cash into the financial system
- Layering — moving it through a series of transactions to obscure its origin
- Integration — bringing it back as apparently legitimate wealth
Hawala transactions were discussed as a mechanism relevant to financial investigation — informal value transfer that settles obligations between intermediaries without money crossing a border, leaving no conventional banking trail.
Key provisions referred to include Section 3 (the offence of money laundering), Section 4 (punishment), Section 5 (provisional attachment of property), Section 8 (adjudication), and Sections 44 and 45 (trial and the conditions governing bail).
The conflict is structural, and it is genuinely hard. Suppose a company under insolvency resolution holds assets the Enforcement Directorate has attached as proceeds of crime. Two statutes now make incompatible demands:
- The IBC requires the assets to be available to satisfy creditors through a resolution plan, within a time limit, as a going concern
- The PMLA requires proceeds of crime to be attached and ultimately confiscated, so that crime does not pay
Both objectives are legitimate. Section 32A is Parliament's attempt to reconcile them — protecting the assets of a company once a resolution plan is approved, while leaving the guilty individuals exposed. As the IICA's Director General Shri Gyaneshwar Kumar Singh observed, despite that section's precise drafting, harmonised implementation continues to face challenges, and the judicial approach is still evolving.
The conceptual difficulty is worth naming plainly. If attachment defeats resolution, then any company whose promoters committed financial crime becomes unresolvable, and the creditors — frequently public sector banks, and therefore the public — absorb the loss while the assets sit idle under attachment. If resolution defeats attachment, then insolvency becomes a laundering route: run a company fraudulently, put it into insolvency, and have a friendly acquirer emerge with clean assets. Section 32A tries to find the line by separating the company from the persons, and the litigation concerns where exactly that line falls.
Our CDS/OTA notes on the banking sector develop the NPA problem the IBC was designed to address.
🔑 Revision block
The sessions. 20 September 2026, Indian Institute of Corporate Affairs (IICA), Manesar, under its 'Meet the Legend' programme. 'IBC as an Evolving Law Through the Amendments' by Dr M.S. Sahoo, former Chairperson, IBBI. 'PMLA-IBC Interface' by Shri Balesh Kumar, Member, Appellate Tribunal (PMLA, FEMA, PBPTA, NDPSA, SAFEMA), for the 8th Post Graduate Insolvency Programme cohort. DG & CEO, IICA: Shri Gyaneshwar Kumar Singh.
The Code. Insolvency and Bankruptcy Code, enacted 28 May 2016. Consolidated the earlier scattered regime — SICA/BIFR, SARFAESI, debt recovery tribunals, Companies Act winding-up.
The institutions. NCLT — adjudicating authority · NCLAT — appeals, then the Supreme Court · IBBI — regulator, established 1 October 2016 · Insolvency Professionals licensed by IBBI.
CIRP. On admission, management is displaced and a Resolution Professional runs the company as a going concern. Committee of Creditors of financial creditors approves a plan by at least 66 per cent voting share; NCLT then approves. No plan → liquidation.
Timeline. 180 days + 90-day extension, outer limit 330 days including litigation. Actual average around 621 days (IBBI, as on 31 March 2026).
Section 53 waterfall. CIRP costs → workmen's dues (24 months) with secured creditors → employee wages → unsecured financial creditors → government dues with remaining secured creditors → other remaining debts → preference shareholders → equity shareholders last. Note: workmen rank alongside secured creditors; equity bears the first loss.
Section 29A. Bars wilful defaulters, undischarged insolvents and connected persons from submitting resolution plans — stops a promoter buying back the company at a discount to the debt they created.
Section 32A. After a resolution plan is approved, the corporate debtor is not liable for pre-CIRP offences and its assets cannot be attached for them; the individuals responsible remain liable.
Sahoo's argument. Markets evolve faster than litigation → subordinate legislation and regulatory mechanisms do most of the adapting. Experimentation in economic laws. Trade-off: frequent amendment keeps a law current but makes it unpredictable, and unpredictability generates the litigation that stretches 330 days to 621.
PMLA, 2002. Enforced by the Enforcement Directorate. Three stages: Placement → Layering → Integration. Hawala as an informal value-transfer mechanism. Section 3 offence · Section 4 punishment · Section 5 provisional attachment · Section 8 adjudication · Sections 44 and 45 trial and bail.
The conflict. IBC wants assets available to creditors within a deadline; PMLA wants proceeds of crime attached and confiscated. If attachment defeats resolution, tainted companies become unresolvable and public banks absorb the loss. If resolution defeats attachment, insolvency becomes a laundering route. Section 32A separates the company from the persons; the litigation is about where that line falls.
🎯 Practice MCQs
Q1. The adjudicating authority under the Insolvency and Bankruptcy Code for corporate insolvency is the: (a) Debt Recovery Tribunal (b) National Company Law Tribunal (c) Insolvency and Bankruptcy Board of India (d) Securities Appellate Tribunal
→ (b) — IBBI is the regulator, not the adjudicator.
Q2. The statutory outer limit for completing the corporate insolvency resolution process is: (a) 180 days (b) 270 days (c) 330 days (d) 365 days
→ (c) — 180 plus a 90-day extension, with 330 as the outer limit including litigation.
Q3. Under the Section 53 waterfall, equity shareholders rank: (a) First, before resolution costs (b) Alongside secured creditors (c) Immediately after workmen (d) Last
→ (d)
Q4. Section 29A of the IBC principally: (a) Fixes the CIRP timeline (b) Bars certain persons, including wilful defaulters, from submitting resolution plans (c) Establishes the IBBI (d) Provides for pre-packaged insolvency
→ (b)
Q5. A resolution plan requires approval by the Committee of Creditors with a voting share of at least: (a) 51 per cent (b) 66 per cent (c) 75 per cent (d) 90 per cent
→ (b)
Q6. The three stages of money laundering, in order, are: (a) Layering, Placement, Integration (b) Placement, Layering, Integration (c) Integration, Placement, Layering (d) Placement, Integration, Layering
→ (b)
Q7. Provisional attachment of property under the Prevention of Money Laundering Act, 2002 is provided for in: (a) Section 3 (b) Section 4 (c) Section 5 (d) Section 45
→ (c) — Section 3 defines the offence and Section 4 the punishment.
Q8. Section 32A of the IBC provides that, once a resolution plan is approved: (a) All past offences of the promoters are pardoned (b) The corporate debtor is not liable for pre-CIRP offences and its assets cannot be attached for them (c) The company is exempt from all taxation (d) Creditors lose the right to appeal
→ (b) — the individuals responsible remain liable.
Q9. The Insolvency and Bankruptcy Board of India was established in: (a) 2014 (b) 2016 (c) 2018 (d) 2020
→ (b) — on 1 October 2016.
Q10. Consider the following statements: 1. Under the Section 53 waterfall, workmen's dues for a specified period rank alongside secured creditors who have relinquished security. 2. Subordinate legislation can generally be issued faster than an amendment to the parent Act. Which is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Both are incorrect
→ (c) — and the second is precisely why regulators carry much of the burden of adapting economic law.
📋 How this gets asked (PYQ pattern)
Corporate and financial law has become a steady presence in the CDS and OTA economy section, and the IBC is the single most examined statute in it.
The institution question asks who adjudicates, who regulates and who hears appeals. NCLT adjudicates, NCLAT appeals, IBBI regulates. The most common error is treating IBBI as the adjudicating body, because regulators elsewhere — SEBI, for instance — combine functions the IBC keeps separate.
The number question covers the 180-90-330 timeline and the 66 per cent CoC threshold. Both are crisp and both recur. The 330-versus-621 contrast is worth carrying separately, because it is exactly the kind of figure that turns a recited answer into a considered one.
The section question is more specialised but increasingly seen: Section 53 for the waterfall, 29A for ineligible bidders, 32A for post-resolution immunity. Three numbers, three functions.
The PMLA crossover asks about the three stages of laundering or about which authority attaches property. The Placement-Layering-Integration sequence is asked so consistently across examinations that it belongs in any candidate's notes regardless of what prompted it.
A closing note on framing. Questions about the IBC increasingly ask for an assessment rather than a description — whether it has succeeded, what its limitations are. The strongest answer names both sides: recovery rates and time-bound process against average resolution well beyond the statutory limit, high haircuts, and NCLT capacity. Specific numbers with dates are what make that answer credible.
Preparing for CDS or OTA? Financial statutes reward learning three things per law — the institutions, the timelines, and the two or three sections that actually get asked. Build the base with our CDS/OTA economy notes, follow the daily CDS/OTA current affairs, and prepare with our faculty in the upcoming Cavalier courses in Delhi.
✍️ Written by Hitendra Deswal — Economy & international relations faculty at The Cavalier. Reviewed by the Cavalier Faculty Desk.