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The Insolvency and Bankruptcy Board of India (IBBI) has introduced the Insolvency Resolution Process for Corporate Persons (Fifth Amendment) Regulations, 2025 (regulations). These make significant changes to the corporate insolvency resolution process (CIRP) and are in force from 4 July 2025.

In particular, the amendments impose disclosure requirements for the information memorandum (IM). This document, prepared by the resolution professional, contains detailed information on the financial, operational and legal position of the corporate debtor. Prospective resolution applicants rely on the IM when drawing up their resolution plans.

The regulations also introduce new restrictions against avoidance transactions as defined in chapter III of the Insolvency and Bankruptcy Code, 2016 (IBC). They further act against fraudulent and wrongful trading under chapter VI of part II of the IBC, which deals with resolution plans. These reforms aim to improve transparency and fairness, and to reduce the risk of litigation arising from undisclosed claims during the CIRP.

Key amendments to the CIRP regulations require the resolution professional to provide the committee of creditors (CoC) and all prospective resolution applicants with updated versions of the IM whenever new material information comes to light. This is provided for in regulation 36(1). The IM, under regulation 36(2)(ha), must now disclose all identified avoidance transactions, such as preferential, undervalued, fraudulent and wrongful dealings. It must set out complete details and the status of any related legal actions. Regulation 38(2A) provides that resolution plans cannot assign these avoidance claims to any party unless such claims have already been disclosed in the IM and brought to the attention of all prospective applicants before the resolution plan deadline. This will ensure transparency in CIRPs and provide a level playing field for all bidders. The new restriction on assignments does not apply to plans filed with the National Company Law Tribunal on or before 4 July 2025.

These amendments are in line with the IBC’s focus on creditor value and orderly processes. Chapter III of part II of the IBC empowers the resolution professional or liquidator to challenge suspect transactions. Should such avoidance claims, which may significantly increase the debtor’s estate, be hidden, prospective resolution applicants cannot accurately assess how much a corporate debtor is worth or draw up competitive bids. Because the amendments require full disclosure of all transactions, CIRPs now offer equal opportunities. All CoC members and potential bidders will know in advance which transactions may be clawed back, allowing them to factor those recoveries or losses into their plans. The IBBI explains that, in the past, prospective resolution applicants did not have access to complete information about avoidance transactions before submitting their plans. This led to reduced transparency and to informational asymmetry.

Prohibiting the undisclosed assignment of avoidance claims promotes fairness. Before, a resolution applicant could surreptitiously carve out such claims. For example, they could assign them to a connected party or a backdoor affiliate without informing other bidders. This created a hidden transfer of value or liability after the fact, undermining creditors’ interests and leading to litigation. The amendment’s prohibition of undisclosed assignments ensures that any resolution plan dealing with such claims does so openly and uniformly.

These amendments bolster the integrity of CIRPs. By requiring IMs and their updates to include all identified avoidance or fraudulent transactions, and by barring any plan from dealing with such transactions unless they were pre-disclosed and communicated to all bidders, the IBBI has improved the information symmetry at the core of the resolution process. All resolution applicants will now have notice of preferential or undervalued transactions affecting asset recovery. This not only promotes fair competition among bidders but also aligns with the CoC’s mandate to assess a plan’s viability under section 30(2) based on full knowledge of the estate’s value. Through these provisions, the amendment will be able to plug information gaps and reduce litigation risks, bolstering the IBC’s goal of creditor-led, efficient corporate rescue.

Aman Avinav is a partner at Phoenix Legal