A Critical Analysis of the Proposed Insolvency and Bankruptcy Board of India (Creditor-Initiated Insolvency Resolution Process) Regulations, 2026

Abstract

The proposed Regulations governing the Creditor-Initiated Insolvency Resolution Process, 2026, constitute a pivotal advancement in India’s insolvency architecture, transitioning the commencement of proceedings from a court-dominated paradigm to a creditor-led modality. Devised to counter the delays, asset value diminution, and procedural bottlenecks inherent in the Insolvency and Bankruptcy Code, 2016, the CIIRP regime aims to promote timely intervention, compress resolution durations, and augment macroeconomic efficiency. Nonetheless, this paradigm shift engenders profound concerns pertaining to the safeguarding
due process, the ambit of judicial scrutiny, and the equilibrium of influence between creditors and corporate debtors. Specifically, the Regulations delineate a framework that empowers creditors to initiate resolution proceedings (Parakkott, 2024), fundamentally altering the traditional "debtor-in-possession" model to one where creditors exert greater control (Bose et al., 2020) . This article presents a thorough and critical evaluation of the CIIRP framework, positioning it amid the expansive development of India’s insolvency system and its progression to a creditor-dominated paradigm. Although the IBC has substantially elevated recovery rates (Bose et al., 2020) and fortified creditor entitlements (Kosuri et al., 2026) , it has concurrently resulted in managerial displacement (Deb & Dube, 2020) . The prospective CIIRP regulations further this progression by amplifying the authority of financial creditors, thereby compelling a more incisive interrogation of their ramifications for equity,
responsibility, and systemic integrity. This paper will critically examine whether the CIIRP Regulations adequately address the intricate balance between creditor empowerment and the protection of other stakeholders, particularly given the historical context of India's corporate insolvency framework evolving from a manager-driven to a manager-displacing model (Deb
& Dube, 2020) . This analysis delineates several structural and procedural shortcomings in the proposed framework. These encompass the attenuation of judicial oversight during the initiation phase (Bork, 2021; Payne & Sarra, 2017) , which engenders apprehensions of arbitrariness and contravention of natural justice principles (Iheme, 2020; Weijs et al., 2019) ; the heightened creditor dominance through diminished voting thresholds (Stef, 2016) , (Weijs et al., 2019) , potentially fostering strategic or coercive invocation of insolvency proceedings (Eidenmüller & Zwieten, 2015) ; and the paucity of protections for corporate debtors (Deakin et al., 2016; Iheme, 2020) , particularly amid the substantial reputational and commercial repercussions
precipitated by commencement (Cepec & Kovač, 2016) . Further apprehensions stem from the non-mandatory moratorium (Bork, 2021; Eidenmüller & Zwieten, 2015) , ambiguities in the debtor-in-possession paradigm (Deakin et al., 2016; Iheme, 2020) , and uncertainties surrounding the Resolution Professional's independence and accountability (GUPTA, 2019; Joshi, 2025) . These issues collectively necessitate a comprehensive reassessment of the Regulations to ensure equitable stakeholder treatment and robust procedural safeguards within the evolving creditor-centric insolvency framework (Eidenmüller & Zwieten, 2015) . Moreover, the invocation of prevailing CIRP provisions mutatis mutandis precipitates regulatory redundancies and interpretive ambiguities, particularly in light of the disparate architectures underpinning the two regimes. The concurrent availability of CIIRP alongside alternative pathways, such as the Pre-Packaged Insolvency Resolution Process, further engenders vulnerabilities to forum shopping and uneven enforcement. Pragmatically, the stringent timelines, institutional capacity limitations, and paucity of granular procedural safeguards for challenging resolution plans are liable to obstruct efficacious implementation and dissuade stakeholder involvement. This situation is further exacerbated by the challenges of mobilizing interim financing in a creditor-oriented bankruptcy regime, which can impact the successful outcome of the resolution process (Baxi, 2023) . Leveraging comparative analyses and extant scholarship, this article contends that although the CIIRP framework advances legitimate aims of efficiency and value maximization, it may intensify extant challenges in India’s insolvency regime without meticulous calibration. Notably, the paucity of robust safeguards and oversight mechanisms could enable opportunistic conduct by astute financial creditors, thereby eroding the principle of equitable stakeholder treatment (Eidenmüller & Zwieten, 2015) . Moreover, challenges in effectively mobilizing interim finance, despite existing priority provisions, heighten concerns over the feasibility of rehabilitation for distressed yet viable enterprises (Baxi, 2023; Puchakayala & Veluchamy, 2023) . The success of the CIIRP framework will ultimately hinge on its capacity to equilibrate efficiency with equity, creditor prerogatives with debtor safeguards, and reformist innovation with foundational insolvency principles. To realize this potential, the framework requires robust procedural protections, precise institutional demarcations, and fortified transparency and accountability protocols, thereby bolstering the enduring resilience and legitimacy of India’s insolvency architecture.