Insolvency and Bankruptcy Code has failed to serve purpose: Opposition members in Lok Sabha

New Delhi: The Insolvency and Bankruptcy Code has failed to serve its purpose as tribunals with limited capacity have not been able to ensure the timely resolution of matters, opposition members said in the Lok Sabha on Wednesday.

Participating in the debate on the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which has been brought afresh based on the recommendations of a select committee of the lower house, opposition members also claimed that the code has become a tool to "rip" the assets of entities.

TMC's Saugata Roy claimed that the judiciary and the executive have both undermined insolvency resolution in the country.


He said the National Company Law Tribunal (NCLT) has "limited capacity", leading to delayed resolution of cases.

He also alleged that the law on fugitive offenders was weak, thus, failing to serve its purpose.

D Prasad Rao of the TDP flagged delayed resolutions but said the amendments in the insolvency and bankruptcy law would ensure faster settlements.

K Veeraswamy of the DMK was of the opinion that the insolvency code has become a tool to "rip" the assets of companies by finding flaws in the insolvency ecosystem.

Like others, he too flagged delays on the part of tribunals to settle disputes.

The government has been trying to resolve several challenges including timelines of resolutions and liquidations, resulting in value deterioration, low realisations to creditors and capacity constraints at NCLT.

The select committee in its report has sought to address some of these key challenges relating to delays in resolution and liquidation, and low recovery rates.