IBBI Notifies the Liquidation Process (Fourth Amendment) Regulations, 2026

 The Insolvency and Bankruptcy Board of India (IBBI) has notified the IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026. These amendments bring targeted refinements to the existing liquidation framework under the Insolvency and Bankruptcy Code, 2016 (IBC), aimed at improving process efficiency, creditor outcomes, and regulatory oversight.

Background

The liquidation process under the IBC is triggered when a corporate debtor fails to resolve its insolvency through the Corporate Insolvency Resolution Process (CIRP). The Liquidation Process Regulations govern how a liquidator administers and winds up the affairs of such entities. IBBI has periodically amended these regulations to address practical challenges and align with evolving market realities. The Fourth Amendment of 2026 continues this trajectory.

Key Amendments

1. Stakeholders' Consultation Committee — Quorum Revision

The amendment revises the quorum requirement for meetings of the Stakeholders' Consultation Committee (SCC). Creditors representing at least 51% of the total debt value must now be present for a valid meeting. This change ensures that key decisions during liquidation reflect a more substantive creditor consensus, reducing the risk of decisions being taken without adequate representation.

2. Dual Valuation Requirement for High-Value Assets

Liquidators are now required to obtain valuations from two registered valuers for assets exceeding a prescribed threshold. Earlier, a single valuation was considered sufficient. The dual-valuation requirement introduces a layer of checks on asset pricing, helping to ensure fair and competitive realisation during auctions.

3. Revised Timelines and Procedures for Sale of Assets

The amendment brings greater clarity to the auction process, including revised timelines for conducting asset sales and specific provisions for handling assets that remain unsold in the first attempt. This addresses a common bottleneck in liquidation proceedings where unsold assets lingered without a clear procedural path.

4. Interim Distribution to Creditors

Clearer guidance has been introduced on making interim distributions to creditors during the pendency of the liquidation process. This is a creditor-friendly change, allowing partial realisation of claims without waiting for the entire liquidation estate to be wound up, thereby improving cash flow timelines for financial creditors.

5. Enhanced Reporting Obligations for Liquidators

Liquidators are now subject to strengthened periodic reporting obligations to both the IBBI and the Adjudicating Authority. This enhances transparency and enables closer regulatory monitoring of liquidation timelines and asset realisation progress.

Significance

These amendments reflect IBBI's ongoing commitment to making the liquidation process more creditor-centric, transparent, and time-bound. The dual valuation norm and revised quorum requirements, in particular, address concerns around undervaluation of assets and tokenistic stakeholder participation — two issues that have drawn attention in past liquidation cases before the NCLT.

For insolvency professionals, liquidators, and creditors actively involved in liquidation proceedings, these changes warrant immediate attention as they alter procedural obligations and decision-making thresholds.

Effective Date

The IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026 are effective from the date of their publication in the Official Gazette.