India’s Insolvency and Bankruptcy Code (IBC) has completed a decade. Its central contribution has been to establish a credible institutional mechanism for dealing with corporate distress while preserving viable businesses as going concerns.
The first decade has delivered significant results. By March 2026, 8,987 corporate insolvency resolution processes had been admitted and 1,419 had resulted in approved resolution plans. Creditors realised approximately ₹4.32 lakh crore through these resolutions—116.85% of liquidation value and more than 94.56% of fair value. In FY2024-25, IBC also accounted for ₹54,528 crore, or 52.4%, of recoveries by scheduled commercial banks through the major recovery channels.
These are significant achievements. More importantly, the IBC has changed the behaviour of borrowers, lenders and investors by making financial distress a process that can no longer simply be deferred.
But the next decade requires a different ambition.
The first decade was about establishing credibility. The next should be about creating predictability and preserving value.
The original promise of the IBC was speed, certainty and value maximisation. However, the process continues to face delays. ICRA reports that the average resolution time rose to 744 days in FY2025-26, and 78% of ongoing CIRPs had already crossed 270 days by March 2026. Recoveries against admitted claims also fell materially during the year.
For investors, uncertainty is more difficult to price than risk. Capital can price the probability of failure; it struggles to price an uncertain resolution timeline, prolonged litigation or uncertainty around implementation of an approved plan.
This makes predictability the next frontier of the IBC.
From resolution to value preservation
There is another important lesson from the first decade: by the time a business enters formal insolvency, considerable enterprise value may already have been lost. Working capital may have eroded, customers may have moved, key employees may have departed, and business relationships may have weakened.
The next phase therefore needs greater emphasis on early recognition and early intervention.
The significance of the IBC should not be measured only by the cases that enter formal insolvency. Its wider impact lies in encouraging borrowers and lenders to address stress before value is irreversibly destroyed. IBBI data on pre-admission resolution provides evidence of this preventive effect.
ARCs: from recovery vehicles to resolution platforms
This is where Asset Reconstruction Companies can play a much larger role.
A stressed loan does not necessarily mean a failed business. The underlying enterprise may still have customers, assets, capabilities and a viable business model. RBI’s regulatory framework permits eligible ARCs to participate as Resolution Applicants under the IBC, subject to prescribed conditions.
The ARC of the next decade should therefore be viewed not merely as a vehicle for recovering dues, but as a form of specialised capital—capable of assessing, restructuring, repositioning and, where appropriate, supporting the revival of stressed enterprises.
Banks and financial institutions should not necessarily remain the long-term holders of stressed exposures. A deeper ecosystem comprising ARCs, special-situation and private-credit funds, AIFs, strategic investors and turnaround capital can improve price discovery, enable earlier intervention and support value creation.
Building IBC 2.0
Financial distress will always be part of a growing economy. Recovery will therefore remain an important measure of the IBC’s effectiveness.
But the next decade should broaden the objective.
IBC 1.0 built credibility. IBC 2.0 should build predictability.
Four outcomes should define the next phase:
- Speed
- Predictability
- Value preservation
- Capital recycling
Not every stressed business requires formal insolvency. Not every distressed asset should end in liquidation. And not every resolution can be effectively financed by traditional lenders.
Special-situation funds, turnaround investors, strategic buyers and ARCs can provide the specialised capital and expertise required to bridge this gap. The emergence of specialised investment vehicles, including those operating from GIFT City, is an encouraging sign of a more institutional distressed-asset market.
India now needs stronger tribunal capacity, earlier intervention, deeper pools of specialised capital, special situation funds greater participation by ARCs and greater certainty around outcomes.
That is the next chapter of the IBC: not simply recovering from distress, but converting resolution into a pathway for renewed growth, productive capital and value creation.
DISCLAIMER: The views expressed are solely of the author and ETLegalWorld does not necessarily subscribe to them. ETLegalWorld will not be responsible for any damage caused to any person or organization directly or indirectly.
