NCLT to admit case only if debt, default established: Insolvency & Bankruptcy (Amendment) Act

The National Company Law Tribunal (NCLT) will admit a case only if the twin requirements of "debt" and "default" are established under the Insolvency and Bankruptcy Code (Amendment) Act, 2026, legal experts said on Friday.

The new features of the amended Act, along with competition law developments, were discussed at a media roundtable on the Insolvency and Bankruptcy Code and Competition Law in India, organised by law firm Khaitan and Co.

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Prateek Kumar and Siddharth Srivastava, both partners at the firm, said that under the amended provisions, a security interest can only be created through an agreement or arrangement between two or more parties. "Debt and default are major determinants for admission of a case into the NCLT," they said.

Srivastava said the stakeholder consultation committee had been abolished, and a resolution plan may now be approved by the NCLT in two phases, implementation and distribution. He added that the amended Act had introduced restoration of the Corporate Insolvency Resolution Process (CIRP) before the initiation of liquidation.

He also said the amended provisions barred a resolution professional from acting as liquidator of the same corporate debtor, made Competition Commission of India (CCI) approval mandatory before a resolution plan is submitted to the adjudicating authority, and required the committee of creditors to record reasons while approving a resolution plan.

Kumar said certain provisions of the amended Act were yet to come into force, including the cross-border insolvency framework and the Creditor Initiated Insolvency Resolution Process (CIIRP), which involves out-of-court insolvency initiation without an automatic moratorium.

Pranjal Prateek, also a partner at the firm, spoke on competition law, saying 2025 was the most active year for merger control to date, with CCI approval timelines continuing to shrink.

He said the Supreme Court this year set aside a Rs 202 crore penalty imposed by the CCI on Amazon in connection with the 2019 Future Coupons deal. The apex court held that mischaracterisation of a transaction is not the same as non-notification, that the CCI cannot seek refiling after the expiry of one year, that it cannot demand fresh notification after granting unconditional approval, and that once a notice has been filed and approved, the CCI cannot claim there was a failure to notify.

"The CCI disposed of 59 cases in 2024-25. It found contravention in only four cases, while 39 cases were dismissed at the prima facie stage," he said.

With inputs from PTI