Timeline Delays in IBC and Their impact on Corporate Insolvency Resolution Process
Introduction:
The Insolvency and Bankruptcy Code, 2016 was introduced to ensure time-bound resolution of corporate insolvency and to maximize asset value while preserving corporate debtor as a going concern. However, over the period of time, since 2016 one of the most pressing challenges has been the timelines i.e., inordinate delays in the successful completion of Corporate Insolvency Resolution Process. The Code has provided the provision of timelines which mandates a resolution of 180 days, extendable to 330 days, however the data and different recent case studies such as Kalyani Transco and Jet Airways demonstrate that delays instead of being an exception, have become a systematic norm.
In the State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan & Mr. Florian Fritsch & Anr., C.A. Nos. 5023–24 of 2024 (S.C.I. Nov. 7, 2024)[1], where a resolution plan got approved in 2020, however the plan failed due to non-compliance by the Successful Resolution Applicant, thereby pushing the airline into liquidation in 2024. The Hon’ble Supreme Court while upholding the decision of liquidation, highlighted the structural and procedural prospects that delay resolution process like repeated adjournments, part-time benches etc. The empirical data shows that timelines exceeded 704 days for financial creditors whereas 714 days for operational creditors by September 2024[2].
In the Kalyani Transco v. Bhushan Power & Steel[3], the Hon’ble Supreme Court struck down the approved resolution plan of JSW Steel due to inordinate delays. The judgement again reaffirmed that the 330-day timeline under section 12 once exceeded without justified cause, will result into liquidation.
Further the recent IBBI Amendment on 26th May, 2025[4] which allows RPs to invite interest not only for the corporate debtor but also for asset wise or segment wise. It raises concerns regarding fragmented insolvency process and further timeline extensions.
The fundamental issue is not just about the timelines but it also entails further consequences like major financial haircuts for creditors, value erosion of assets, etc. Thus, the very objective of IBC i.e., timely resolution stands at risk today.
TIMELINES ENSHRINED UNDER THE CODE:
The Code of 2016 has mentioned different timelines for every particular task in the CIRP. For instance, as per Section 5(14) the timeline for completion of the Insolvency resolution process is 180 days from the date of commencement. However, 180 days’ time period can be extended to further 90 days as per Section 12 of the Code. Hence, the maximum time period for CIRP as mentioned in the Code is 270 days (inclusive of 90 days extension). All the important tasks i.e., COC Constitution; appointment of RP/IRP; invitation for claims; receiving resolution plans and thereafter approval of those resolution plans etc., are required to be completed within the time period as 270 days. It is pertinent to note, that the said timeline of 270 days has been extended to 330 days as per Section 12 of the Code after 2019 amendment. Thus, the maximum time for completing the entire CIRP proceedings and other legal proceedings shall be 300 days.
REASONS FOR DELAY:
The persistent delays in CIRP under the IBC regime stem from a confluence of structural and procedural shortcoming. Chief among them is the erosion of asset value over time, which significantly diminishes recoveries for creditors. As the resolution process drags on, creditors are compelled to accept deep haircuts due to the depreciating worth of the corporate debtor’s assets during the course of time, compounded by reduce negotiating leverage and heightened commercial uncertainty. Moreover, the resolution framework is impeded by the inefficiency of Information Utilities critical repositories of financial data of which only one, the National E- Governance Services Limited, is currently operational in India.
The issue of delay is further exacerbated by systematic non-compliance with the statutorily mandated 330-day resolution timeline by adjudicatory bodies such as the NCLT and NCLAT, with the average resolution period now extending to an alarming 653 days. This delay is also attributable to the adequate judicial capacity, as the current sanctioned strength of NCLT and NCLAT benches remains grossly insufficient in light of rising case backlogs. Additionally, the limited pool of Insolvency Resolution Professionals only 892 registered in the first half of 2023 coupled with unforeseen events such as death of IRP mid- process, further stalls resolution proceedings. Together, these factors have rendered the insolvency framework increasingly burdensome, inefficient, and costly.
VIEWS/COMMENTS:
Multiple insolvency professionals have repeatedly raised the concerns regarding the chronic delays in insolvency framework of India under the IBC. Critical perspectives emerge not only from judicial reasonings but also from practitioners, and other regulatory observers who have been critically evaluating the functioning of the code.
To reiterate, a landmark case decision in Jet Airways which is SBI v. Murari Lal Jalan & Florian Fritsch Consortium. The apex court condemned the prolonged delay, arising even after approved resolution plan. The court criticized both the Hon’ble Tribunal (NLCT) and the Hon’ble Appellate Tribunal (NCLAT) for showing leniency in granting repeated extensions. The bench adherently pointed that lack of full day sitting, procedural ambiguity etc. had indeed rendered timely disposal impossible. It also stressed that NCLTs should not casually disregard the commercial wisdom of CoC i.e. Committee of Creditors. Similarly in Kalyani Transco case, the Hon’ble Supreme Court has set aside the resolution plan that was approved by both tribunals due to procedural delays. The court reaffirmed that the 330 days under section 12 of the code is the hard limit which is not subjected to discretionary extensions unless the exceptional circumstances justify the delay in the process.
From a policy standpoint and IBBI’s own data reflect a concern regarding delay. CIRP cases average over 700 days, and only 13.3% of admitted cases result in successful resolution[5]. To simply put, delayed resolution means distressed loss of asset value and loss to creditors too. From the perspective of Insolvency professionals, excessive leniency to SRAs, persistent issue of adjournments creates a culture of delayed procedures. Further, as per available reports and empirical findings, numerous CIRPs have exceeded the statutory limit of 180 days with several proceedings extending beyond 600 days[6]. Emphasizing that inordinate delays undermine the certainty and efficiency envisaged under the Code, the Court observed that the legislative intent behind the IBC is to facilitate expeditious insolvency resolution and ensure the prompt restoration of the corporate debtor to effective management.
Against this background, the recent amendment which permits segment-wise or asset-sales, has invited concerns. According to my own perspective, such approach in the absence of strict timelines may paradoxically facilitate delay. Thus, to restore the Code’s credibility it is critical to fix the issue of timeline through both legislative framework and institutional strengthening.
JUSTIFICATION:
The very objective of IBC is to provide a time-bound resolution mechanism that aims to preserve the corporate debtor as a going concern and to maximize the value of assets. However, the growing divergence with regard to timelines strikes the core objective of the IBC. And the 26th May 2025 amendment may lead to disjointed disposal of key assets. It effectively turns CIPR into a controlled liquidation and segment-wise resolution could delay the process further. This amendment is contrary to Supreme Court’s reaffirmation in Kalyani and Jet Airways when the court has emphasized preserving corporate life and avoiding asset destruction through fragmented sales.
In my view, prolonged insolvency proceedings erode value, disappoint creditors and destroy faith in the given process. The Code’s success can be seen as a mixed story and the adherence to timeline is a big challenge which can be taken into knowledge and can be overcome with the cooperation and harmonious participation of all the stakeholders who are involved in the process of CIRP. The present scenario demands for a responsible and diligent behavior from all stakeholders i.e., COC members, Resolution Professionals as all of them hold a trustworthy position and are required to take all necessary steps in CIRP completion within the prescribed time period of the Act. Thus, urgent recalibration is essential not by adding further exceptions but by strengthening legislative enforcement, judicial discipline and capacity of institutions to deliver resolutions on time.
[1] (2024) 8 SCC 1
[2] CARE Ratings Ltd., Insolvency and Bankruptcy Code Update: Recovery Rate Dips to 28% in Q2 FY25 as Stretched Timelines Hamper Resolution (Nov. 15, 2024), available at Insolvency and Bankruptcy Code Update September 2024,https://www.careratings.com/uploads/newsfiles/1731671652_Insolvency%20and%20Bankruptcy%20Code%20Update%20September%202024.pdf
[3] 2025 SCC OnLine SC 1010
[4] The Insolvency and Bankruptcy Code, 2016, No. 31 of 2016 (India), as amended. Available at IBBI, https://ibbi.gov.in/uploads/legalframwork/b20d1a86c4ff2cafe95cd432e755bba1.pdf
[5] Aseem Chaturvedi, Arpit Kumar Singh, Siddhant Kumar & Amaan Khan, Time of Essence: A Test of IBC’s Timelines and Accountability, SCC Online (April 9, 2025), https://www.scconline.com/blog/post/2025/04/09/time-of-essence-ibc-timelines-accountability/
[6] Insolvency Process Getting Only Longer and More Tedious; Average Resolution Time Rises to 761 Days in April–Sept, Financial Express (Nov. 12, 2024), https://www.financialexpress.com/business/industry-insolvency-process-getting-only-longer-and-more-tedious-average-resolution-time-rises-to-761-days-in-april-sept-3662670/
By Nandini Sharma
Legal Intern @Singhania & Co
