Capital in Crisis: Re-Evaluating the Insolvency and Bankruptcy Code’s Efficacy in Corporate Finance Post-2025 Amendments

The Insolvency and Bankruptcy Code, 2016 (“IBC”), was heralded as a transformative framework intended to restore creditor primacy and institutional discipline within India’s distressed asset ecosystem. However, the Code’s expanding interface with corporate finance, particularly its influence on debt structuring, capital markets, and investor confidence, has exposed persistent structural limitations. This paper critically re-evaluates the IBC’s efficacy in light of the 2025 Insolvency and Bankruptcy Board of India (“IBBI”) amendments, questioning whether the current regime adequately supports the needs of a modern, investment-driven financial system. Adopting a multi-stakeholder lens, the study analyses recent and systemically significant insolvency proceedings such as Zee Entertainment Enterprises, Indiabulls Housing Finance, and Byju’s Alpha to highlight procedural asymmetries, erosion of asset value, and the Code’s limited adaptability to asset-light and sector-specific financial stress. These cases reveal the consequences of protracted timelines, undifferentiated moratoriums, and misaligned stakeholder incentives. The paper also considers evolving jurisprudence on differential treatment of creditors, valuation disputes, and CoC commercial discretion, as seen in key appellate rulings and regulatory commentaries that continue to shape the resolution landscape. Integrating doctrinal analysis with empirical indicators drawn from SEBI disclosures, CRISIL ratings, and judicial records, the paper assesses the IBC’s impact on credit market depth, investment risk appetite, and resolution predictability. Comparative insights are drawn from the UK’s pre-pack administration model, the U.S. Chapter 11 debtor-in-possession framework, and Singapore’s creditor-class restructuring tools—each offering greater alignment with global capital standards. The paper concludes that without deeper structural reforms—including class-based voting rights, dynamic moratorium design, contingent equity protection, and sector-specific pre-packaged resolution mechanisms—the IBC risks undermining the capital formation it was designed to secure. In a financial environment increasingly shaped by institutional capital, rapid sectoral shifts, and global risk sensitivities, the Code must evolve to protect not just creditor recovery but the integrity and appeal of India’s broader investment climate.