- with Finance and Tax Executives
- in India
- with readers working within the Law Firm industries
The Insolvency and Bankruptcy Board of India (IBBI) has officially released the Insolvency Professionals (Second Amendment) Regulations, 2025 via Notification No. IBBI/2025-26/GN/REG132 on 20 November 2025 where certain amendments were made. These amendments, enacted under Sections 196, 207, and 208 in conjunction with Section 240 of the Insolvency and Bankruptcy Code, 2016 (the Code), are effective immediately and represent the second major regulatory reform for insolvency professionals (IPs) in 2025.
The amendments signify a transition from self-regulated responsibilities and discretionary oversight to a more organized, judicially monitored, and performance-oriented insolvency practice. The aim is to improve the quality of disclosures, bolster independence, ensure equitable distribution of assignments, and strengthen accountability throughout the insolvency framework.
Key Amendments and Their Implications
1. Quantitative Limitation on Assignments: Implementation of Regulation 7B
A novel provision, designated as Regulation 7B, has been incorporated directly following Regulation 7A within the Principal Regulations, instituting a statutory limitation on the quantity of assignments an individual insolvency professional is permitted to undertake.
The principal characteristics of this limitation are delineated as follows:
- An individual insolvency professional, who is not registered as an insolvency professional entity, is now constrained to a maximum of ten (10) concurrent assignments cumulatively. This restriction applies uniformly across all capacities, encompassing roles such as Interim Resolution Professional (IRP), Resolution Professional (RP) within corporate insolvency resolution processes, and as Liquidator in liquidation procedures.
- Within this comprehensive cap, no more than three (3) assignments may pertain to cases where the admitted claims of creditors exceed ₹1,000 crore each.
- Insolvency professionals who, as of the effective date of the Amendment Regulations, currently possess assignments that surpass these stipulated limits are barred from accepting any additional appointments until their active assignments are reduced to comply with the mandated threshold.
Implication
This marks a significant transition from the previous paradigm of self-regulated workload oversight to a framework that enforces a statutory quantitative restriction. The aim is to avert the overextension of insolvency professionals, thereby fostering elevated standards of diligence, enhancing compliance with timelines, and protecting the integrity of decision-making in insolvency and liquidation processes.
2. Modifications to the Code of Conduct: Change in Approval Authority
The Amendment Regulations bring about noteworthy alterations to the Code of Conduct for insolvency professionals as outlined in the First Schedule of the Principal Regulations.
- To begin with, in Clause 6, the term "the approval of the Board" has been replaced with "the prior approval of the Adjudicating Authority," specifically referring to the appropriate Bench of the National Company Law Tribunal (NCLT). This change effectively transfers the responsibility for granting specific ethical and conflict-related approvals from the IBBI to the adjudicating tribunal.
- Additionally, Clause 22, which was previously added as a clarifying provision, has now been removed.
Implication
This reassignment of approval authority from the executive regulator to the judicial body indicates a shift towards increased judicial oversight regarding professional conduct issues. By delegating such decisions to the NCLT, the framework enhances impartiality, upholds the principles of due process, and mitigates any perceived conflict between regulatory oversight and judicial fairness within the insolvency landscape.
3. Broader Significance: Implications for the Insolvency Ecosystem
The Amendment Regulations signify a significant transformation in the regulatory framework governing insolvency professionals in India. The system is evolving from a model primarily reliant on self-assessment and self-governance, towards one defined by enforceable limits, strengthened institutional oversight, and heightened accountability measures.
The establishment of quantitative limits on simultaneous assignments indicates a purposeful regulatory focus on quality rather than quantity. By preventing professionals from becoming overcommitted across various cases, the IBBI aims to foster more thorough involvement, prompt decision-making, and more reliable oversight in each situation.
Likewise, the delegation of approval authority to the adjudicating tribunal adds an extra layer of examination. This enhances protections against conflicts of interest, bolsters procedural clarity, and aligns the process more closely with the principles of natural justice.
The updated framework necessitates an immediate adjustment in operations. This involves conducting a thorough assessment of ongoing assignments, reevaluating internal resource allocation, and reorganizing future engagement strategies. Such actions are crucial to ensure complete compliance and reduce potential regulatory risks, especially considering the implications outlined in Section 220 of the Insolvency and Bankruptcy Code.
Conclusion
The IBBI's 2025 Second Amendment Regulations delineate a distinct regulatory trajectory: enhancing governance, advancing professional standards, and bolstering fiduciary responsibility within the insolvency sector. By instituting a compulsory limit on simultaneous assignments, reallocating critical approval authorities to the adjudicating tribunal, and broadening supervisory frameworks, the regulator has initiated a transformative phase in insolvency administration, one that emphasizes diligence, autonomy, and quality over volume-centric engagements.
Insolvency practitioners, insolvency professional agencies, creditors, and other relevant parties must actively reevaluate their current mandates, internal compliance mechanisms, and resource allocation strategies to ensure congruence with the updated framework. Prompt adaptation will be crucial to mitigate regulatory risks and preserve the integrity and efficacy of the insolvency resolution ecosystem.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
