IBBI Proposes Mandatory Reason Recording by CoC for Liquidation Decisions

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  • Last Updated on 19 November, 2025

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IBBI liquidation reason recording

Discussion Paper; Dated: 17.11.2025

The Insolvency and Bankruptcy Board of India (IBBI) has released a discussion paper proposing a set of targeted measures to strengthen procedural clarity, disclosure standards, and transparency within the Corporate Insolvency Resolution Process (CIRP).

The proposals aim to address practical gaps observed in ongoing CIRP cases and improve the quality of information available to stakeholders, insolvency professionals, and the Committee of Creditors (CoC).

1. Key Proposals in the Discussion Paper

1.1 Disclosure of Allottees in the Information Memorandum

The paper proposes mandatory disclosure of all allottees (particularly in real estate CIRPs) in the Information Memorandum (IM).

It further recommends clear disclosure of how such allottees are treated in the Resolution Plan, ensuring that:

  • Their claims are accurately captured, and
  • Their rights and treatment are transparent for all stakeholders.

1.2 Disclosure of Receivables and Attached Assets

The discussion paper recommends including the following in the Information Memorandum:

  • Details of receivables due to the corporate debtor, and
  • Information on assets under attachment (including attachments by enforcement agencies, tax authorities, or courts).

This enhanced disclosure aims to improve valuation accuracy, facilitate informed bidding, and ensure better assessment of the asset pool.

1.3 Mandatory Recording of Reasons for Liquidation Recommendation

The IBBI has proposed that the Committee of Creditors (CoC) must record detailed reasons when recommending liquidation of the corporate debtor.

This requirement is intended to:

  • Improve accountability,
  • Enhance clarity for adjudicating authorities, and
  • Ensure that liquidation is recommended only after due consideration of alternatives.

2. Public Consultation

IBBI has invited comments from stakeholders, including insolvency professionals, creditors, market participants, real estate allottees, and the public.

Last date for submission of comments – December 8, 2025

3. Significance

The proposed measures are expected to:

  • Strengthen transparency and completeness of information in CIRP,
  • Enable more efficient and informed decision-making by CoC and resolution applicants,
  • Improve market confidence in the insolvency resolution ecosystem, and
  • Promote fair and consistent practices across insolvency cases.
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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied