INTRODUCTION
The Insolvency and Bankruptcy Code (Amendment) Bill 2025 (Bill) proposes to expand the definition of a “resolution plan” under Section 5(26) of the Insolvency and Bankruptcy Code 2016 (Code) to expressly include the sale of one or more assets of the corporate debtor (CD). This may seem to be a mere shift in the letter of the law – however, in substance, it represents a quite necessary alignment between the Code and related secondary legislation, that is, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 (CIRP Regulations).

This amendment alters corporate insolvency resolution process (CIRP) heavily; a shift from the traditional “one resolution plan by one applicant for the whole entity” model to allow multiple resolution plans and resolution applicants (RA) for multiple assets of large conglomerates with diverse asset portfolios. With the Select Committee expected to submit its report before the upcoming winter session of Parliament in late November 2025, this paper thinks it timely to examine: firstly, the whys and hows of asset-wise CIRP, secondly, the implications of the proposed change, and finally, corresponding solutions and remarks to conclude the discussion.

UNDERSTANDING ASSET-WISE CIRP
Asset-wise CIRP refers to a process wherein different assets or business segments of a CD are resolved under separate resolution plans, possibly with different RAs. The CD is not an indivisible economic unit here, rather, a composition of assets capable of generating independent value.

This concept was introduced by the Insolvency and Bankruptcy Board of India (IBBI) as an alternative to the traditional model, where only one resolution plan is submitted by RAs for the one entire distressed CD. This rigid framework worked reasonably well for small-scale companies, but for large conglomerates, it proved ill-suited. Earlier, conglomerates with diversified operations across and within sectors, such as real estate, infrastructure, finance, manufacturing, and other business lines, often struggled to find RAs with equal expertise, capability, and interest in acquiring all their assets collectively.

Asset-wise CIRP bridges this gap. RAs can simply focus on what aligns with their strengths and strategic interests. In practice, this means that infrastructure arms can be allocated to infrastructure players, retail loan portfolios can be transferred to fintech companies, manufacturing divisions can be sold to industrial bidders, etc., thereby opening up wider participation. It breaks through the “all-or-nothing” barrier that earlier deterred RAs. In increasing recovery for creditors, it satisfies the twin objectives of the Code: firstly, the revival of the distressed entity, and secondly, the maximization of its asset value.

EVOLUTION OF ASSET-WISE CIRP
Understanding the background behind the concept of asset-wise CIRP is vital to understanding the problems that arise as a result of it. Its genesis is in Section 5(26) IBC. Between 2016 and 2022, this section defined a resolution plan to mean one resolving the CD as a going concern – either through a merger, amalgamation and demerger.

The restricted scope prevented the piecemeal sale of the CD – different resolution plans were concerned with different chunks of assets; the same was observed in the 32nd Parliamentary Report, which suggested a statutory clarification to remedy the issue of “flexibility within the IBC.” Similar views were contemplated by IBBI in its Discussion Paper (albeit with the suggested nomenclature of Regulation 37A) of the amendment, following which Regulation 36B(6A) (empowering RP to issue a request for resolution plan (RFRP) for sale of one of or more assets of the CD, on the non-receipt of any plans) and Regulation 37(m) (allowing the multiple resolution plans to dispose of the CD in parts), were introduced in September 2022 in the CIRP (Fourth Amendment) Regulations.

However, Regulation 36B(6A) was omitted and replaced by a broader Regulation 36(1A), in May 2025 – the consequence of a recommendation in IBBI’s February 2025 Discussion Paper. The intent is to allow a concurrent piecemeal sale of assets, i.e., the statutory qualifier of the RP not receiving any plans from prospective bidders to be able to issue an RFRP was removed. Now, multiple plans for the disposal of the entirety of the CD and its separate assets can be invited at the same time.

The 2025 Bill is the most recent proposal in this regard; the enabling provision that was previously lacking has now been appended as part of an Explanation to Section 5(26).

CHALLENGES IN PRACTICE
With the addition of an enabling provision, the Bill clears and clarifies a few things, but some pressing questions remain.

1. Fragmentation of CD
   As noted above, the set of 2025 amendments seek to prioritise asset value, but they run the risk of a self-fulfilling prophecy that breaks the CD apart.

   This legislative scheme allows RAs to cherry-pick the most profitable assets of the CD. Granted, this is a situation that was foreseeable right from the time of the 2016 regulations, but the recent amendments that allow the resolution professional (RP) to solicit bids for piecemeal asset sales right from the outset, may have the unfortunate effect of incentivising RAs to bid exclusively on the assets they deem most worthwhile and leave the remaining business assets untouched. Specialised bidders, interested in very specific assets, don’t even need to wait for a situation where the CD is attempted to be sold as a whole. A scenario where the CD is stripped of its core revenue-generating assets, with only unsupported liabilities left behind, is probable.

   One may counter that if read in light of the Ministry of Corporate Affairs’ clarifications in its 2023 paper, it is understood that at least one of the plans has to provide for the sale of the CD as a going concern – basically, as a precondition for the CIRP to conclude – which would prevent the CD’s fragmentation into valuable assets and remaining liabilities.

   However, there is no clarity on how this would actually be worked around practically. How would different plans (for different assets and for the going concern) be ranked by the committee of creditors (CoC)? The job is to compare disparate bids: multiple bids for 100% of the CD (going concern) vs. multiple bids covering (say) 50% of assets (asset sale). What would the Evaluation Matrix (EM) look like in such cases? EM for a going concern would heavily weight parameters like business continuity or human resource retention, while EM for an asset sale would ideally feature upfront cash recovery or net present value as parameters. Which will be given precedence? There may arise a scenario where RAs bid for only the most profitable assets – then, certain RAs wishing to bid for the entire CD could reasonably conclude that they cannot compete for its full value. They might then either forego bidding or reduce their bid to cover only the residual entity (comprising only the non-core and non-viable assets). The CoC, in such a situation, might be compelled to choose such a plan just to meet the formality of a going concern resolution plan.

2. Inter-creditor logistics
   Multiple charges can be created on an asset. In a case where an RA’s resolution plan provides for the sale of a specific asset in favour of the first charge holder, the second charge holder or a group of subsequent charge holders, can also use their larger voting share/s to reject such a plan, which can lead to the 66% voting threshold not being satisfied. With the amendments, the RP is logistically burdened with contrasting different asset plans to assess the payout provided to creditors with different security interests.

   Even if this voting standard is somehow met (and the plan is passed), the RP is additionally burdened with ensuring that the dissenting creditors receive a minimal amount, at par with their liquidation recovery. The RP must then either:

   1. a) per extant law, compute said minimal recovery amount from the liquidation estate and compare it against the payout proposed by every different asset plan where the subsequent holders have dissented, or
   2. b) per the proposed Bill, compute the lower of the liquidation recovery or resolution proceeds (per Section 53) and compare that result against the payout proposed by every different asset plan.
      Either way, this results in increased administrative burden and costs. Increased litigation by prejudiced creditors and undue delays are also predictable outcomes.
3. Corporate group logistics
   In a group of companies, corporate guarantees, cross-collateralization, and inter-company loans are fairly common. In such a group structure, in the absence of a clear legislative framework for group insolvency, courts have often ordered consolidation of CIRPs for multiple companies to account for the interdependent and intermeshed nature of assets and liabilities.

   But asset-wise resolution implies multiple plans, which complicates such scenarios. Consider: A holding company has guaranteed its now-insolvent subsidiary’s loan, if the subsidiary’s assets are sold piecemeal in a resolution plan, where Plan 1 provides for sale of Asset A for Rs. 50 lakh and Plan 2 for sale of Asset B for Rs. 30 lakh:

   1. How would the proceeds from that be distributed amongst creditors – would it flow to one with a claim in that asset or to the entire pool of creditors? (Value maximisation would suggest the latter, which has also been noted here).
   2. What happens to the holding company’s guarantee obligation? Even if the creditors’ claims against the CD stand extinguished, they would legally still have a valid claim against the holding, but to what amount?
   3. How would the ‘clean slate’ theory, entitling the SRA to acquire fresh assets with no attached liabilities, factor in in such cases?

   Even the modus operandi concerning assets is unclear. Assets may be held or used jointly by the group. The preparation of the information memorandum in such cases would be quite complex – RP would have to furnish separate details as to the ownership and commercial value of each asset track. For intellectual property, brands are generally curated for the group, not for any one company within the group. Sale of a business vertical (say, the retail division) would be complicated by questions of to whom the goodwill/brand value or intellectual property rights can be attributed and how it may be sold/licensed to an RA? Thus, for a single shared asset, separate sale/licensing agreements must be negotiated with many unrelated bidders simultaneously.

CONCLUSION
A host of speculated issues have been dissected above. The amendment’s legislative intent of value-focused recovery is visible, but its success now rests on regulatory and judicial precision. Clarity is always preferable, and the issuance of detailed guidelines by IBBI on the treatment of interlinked assets and inter-creditor voting mechanisms would be helpful. Still, the authors have attempted to put forth solutions/comments concerning these issues:

1. Valuers are already tasked with ascertaining a fair value and a liquidation value, it is suggested by the authors that a new measure or a ‘residual value’ for the non-core assets be introduced. This value exists for the remainder of the CD, based on the premise that the core assets have been cherry-picked and sold already, and the rest need to be sold as a going concern. To clarify – this would enlighten the CoC on the true value of the liability-heavy entity left behind if the asset-wise sale is chosen – which would enable it to make a more informed decision as to its future course of action.
2. The disclosure of a ‘fragmentation margin’ may be useful to fairly decide if asset-specific sales are the way to go. This figure could be the difference between the aggregate asset sale value and going concern sale value. If this figure is large enough to justify sacrificing the going concern objective of the IBC, then surely the CoC could do away with the said formality and approve such a plan. To ensure fairness in its exercise of commercial wisdom, the CoC could be mandated to record written and reasoned reasons. For example, if it feels that the high fragmentation margin outweighs certain non-quantifiable benefits of a going concern resolution, say, job preservation, it could furnish a justification for the same.
3. To help reconcile the issue of different matrices for different sales, a model preference clause could be inserted. If the recovery projections of the going concern and asset sale plans are found to be similar (a fixed margin, say 4% of net present value), the CoC ought to prefer the former. That way, there will be certainty that asset sales have only been adopted when the financial recovery undeniably outweighs the value of retaining the whole CD.
4. The issue of inter-creditor logistics remains heavily dependent on its interpretation by the Adjudicating Authorities. Clarification on the same has been sought multiple times, and it is the authors’ earnest desire that provisions preventing collusion by subsequent charge holders be introduced. The logistical burden on the RP of computing different payouts for different charge holders can be lightened by standardising calculation for the minimal amount – that is, calculating it against the hypothetical liquidation of the specific asset mentioned in the plan, rather than the entire liquidation estate. A clarification by IBBI to that effect would greatly simplify matters.
5. As for group insolvency logistics, the answers remain to be seen. Rules may soon be formulated by way of the enabling provision introduced in Chapter VA of the Bill. Hopefully, India acts in line with global best practices – in the United States, under Chapter 11 of the Bankruptcy Code, debtors may sectionally or wholly sell assets, which may be individual business units, litigation rights, or subsidiaries, with creditor and court approval, increasing opportunities for distressed companies to generate value. Similarly, in the United Kingdom, “pre-pack” administrations allow the business and assets of a distressed company to be sold either just before or immediately after the appointment of an administrator, a going-concern sale of a part or all of its operations.

Therefore, if implemented with a delicate balance of flexibility and oversight, asset-wise CIRP may soon drive India’s very own efficiency-driven insolvency regime.