Abstract

The 2026 amendment to Regulation 16 of the IBBI (Liquidation Process) Regulations, 2016, carries forward claims verified during the CIRP into liquidation. While intended to reduce duplication of efforts, the amendment also shifts the relevant date for claims and raises concerns regarding the treatment of interest accruing during CIRP.

Keywords: IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026; Regulation 16; Verification of Claims; Duplication of efforts; Interest

Introduction

The Insolvency and Bankruptcy Board of India (hereinafter ‘IBBI’), vide the IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026 (hereinafter ‘the 2026 Amendment’), has amended Regulation 16 of the IBBI (Liquidation Process) Regulations, 2016, governing submission of claims during liquidation. While the IBBI has justified the Amendment on the ground that it would reduce duplication of effort and expedite the liquidation process, the Amendment appears to bring about another significant change.

By shifting the relevant date of reference for consideration of claims from the liquidation commencement date to the insolvency commencement date, the Amendment raises questions regarding the treatment of claims and interest accruing during the Corporate Insolvency Resolution Process (hereinafter ‘the CIRP’). This article examines the position prior to the Amendment and the implications arising from the amended framework further attempting to provide a way forward to avoid duplication of efforts while simultaneously ensuring creditors’ interest.

The Position Prior to the Amendment

Originally, Regulation 16 as stipulated in the IBBI (Liquidation Process) Regulations, 2016, read as follows- “16. Proof of claim.-

A person, who claims to be a stakeholder, shall prove his claim for debt or dues to him, including interest, if any, as on the liquidation commencement date.”

The above provision was substituted by IBBI (Liquidation Process) (Amendment) Regulations, 2019, vide Notification No. IBBI/2019-2020/GN/REG-047, dated 25.07.2019, for the following:

“16. Submission of claim.- (1) A person, who claims to be a stakeholder, shall submit its claim, or update its claim submitted during the corporate insolvency resolution process, including interest, if any, on or before the last date mentioned in the public announcement.

(2) A person shall prove its claim for debt or dues to him, including interest, if any, as on the liquidation commencement date.”

Accordingly, under the framework that existed prior to the 2026 Amendment, subsequent to the CIRP, on initiation of the liquidation process, a fresh public announcement for submission of claims was released. Any person claiming to be a stakeholder would have two options following such release. Firstly, they could submit their claim before the last date notified in the public announcement. Alternatively, they would be eligible to update their claim, including interest, in case they had previously submitted a claim during the CIRP. Accordingly, proof of such claim, in either scenario, was required as on the liquidation commencement date.

What Has Changed?

The position settled by the 2019 amendment was followed till date. However, the same now stands substituted by the IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026, vide Notification No. IBBI/2026-27/GN/REG151, dated 01.06.2026, by the following “16. Submission of claim.- (1) A person, who claims to be a stakeholder, shall submit its claim where not submitted during the corporate insolvency resolution process as on insolvency commencement date, within fourteen days of the liquidation commencement date.

(2) A person shall prove its claim for debt or dues to him, for the newly submitted claims, if any, as on the insolvency commencement date.

(3) A stakeholder shall update its claim as and when the claim is satisfied, partly or fully, from any source in any manner, after the insolvency commencement date.”

Accordingly, a public announcement after the initiation of the process of liquidation is no longer required to be issued. The amended Regulations appear to carry forward the claims made during the insolvency resolution process; hence, only fresh claims, where not previously submitted, need to be submitted within fourteen days of the liquidation commencement date. Further, proof of such claims is no longer required as on the liquidation commencement date but rather as on the insolvency commencement date.

The Rationale Set Out by the IBBI

The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, under Regulation 13, lays down the provision for verification of claims submitted upon the initiation of CIRP. Accordingly, the Interim Resolution Professional or the Resolution Professional verifies all the submitted claims and consolidates a publicly accessible list of creditors.

The IBBI, vide Press Release No. IBBI/PR/2026/11, dated 03.06.2026, has stated the rationale for carrying forward the claims made during the CIRP to the liquidation process as- “Carry-forward of claims from the CIRP – claims verified during the CIRP are carried forward as on the insolvency commencement date and are not re-verified, and the liquidation public announcement does not call for fresh claims. Fresh claims are invited only from stakeholders who did not file during the CIRP. This avoids duplication of effort and speeds up the process.”

The Board has justified the Amendment by focusing on reduced timelines and diminished efforts by the liquidator. However, the Press Release does not specifically address the fact that another major change introduced by the 2026 Amendment is the shift in focus from the liquidation commencement date to the insolvency commencement date.

The Interest Conundrum: Has the Amendment Frozen Creditor Claims at the Insolvency Commencement Date?

One major change that the 2026 Amendment brought is the deletion of the provision for updating claims. Consequently, claims submitted during the CIRP appear to stand frozen as on the insolvency commencement date. Further, even fresh claims are now required to be considered as on the insolvency commencement date, rather than the liquidation commencement date.

The same is further reinforced in Regulation 16(2), which now requires newly submitted claims to be proved as on the insolvency commencement date. The Amendment has also omitted the mention of “interest” completely from the provision. This indicates a shift from the liquidation commencement date to the insolvency commencement date, as the relevant reference point for the claims.

A significant consequence to this change is that interest on such claims may no longer be considered for the duration of the CIRP, as the claims remain frozen as on the insolvency commencement date.

Implications for Creditors

It is to be noted that Section 12 of the Insolvency and Bankruptcy Code, 2016 provides that a CIRP may be completed within a period of three hundred and thirty days from the insolvency commencement date. This means that for the duration of the CIRP, which may run for as long as 330 days, a creditor may be unable to account for interest on the amount they are entitled to.

The impact is particularly significant where creditors have substantial financial exposure to the corporate debtor. Hence, the amount of interest that accrues during this period may itself be substantial. If they had recovered this money at an earlier date, it could have been invested or utilized otherwise, generating further returns or meeting other commercial obligations. Consequently, the amended provision may result in a substantial financial loss to the creditors on account of interest accruing during the CIRP. The longer the CIRP continues, the greater the potential impact on the value ultimately recoverable by the creditors.

The Way Forward

If the objective behind the 2026 Amendment is to avoid the duplication of effort caused by the re-verification of claims already verified during the CIRP, the same could have been achieved without shifting the relevant date for consideration of claims to the insolvency commencement date. Instead of re-verifying the entire claim, verification could have been limited to the updated portion of the claim, including any interest accrued during the CIRP. Fresh claims would, in any event, require verification upon the commencement of liquidation. Accordingly, there was no requirement to shift the relevant reference point for such claims to the insolvency commencement date. Such an approach would avoid duplication of effort while ensuring that creditors are able to account for the amounts accruing during the CIRP.

Conclusion

To conclude, the IBBI has justified the Amendment on the basis of reduced timelines and diminished efforts by the liquidator. While the Amendment may achieve this objective, it also brings about a significant shift from the liquidation commencement date to the insolvency commencement date. The deletion of the provision for updation of claims and omission of any reference to “interest” further support this position.

As a result, claims appear to remain frozen as on the insolvency commencement date. In cases where the CIRP continues for a considerable period, on initiation of the liquidation process, this may have a direct impact on creditors, who may no longer be able to account for interest accruing during such period. While the objective of procedural efficiency is clear, the same could have been achieved by limiting the verification of claims to the updated amount and newly submitted claims only, without affecting creditor recoveries. Such an approach would have reduced duplication of effort while ensuring that creditors are able to account for interest accruing during the CIRP.