The proposed Section 28A of the Bill is a practical step toward resolving the long-standing problem of fragmented enforcement of third-party security and directly addresses the deadlock seen in Vistra ITCL.

The CIIRP procedure, aiming for efficiency and speed, creates a judicial vacuum which can potentially be used by the corporate debtor to dissipate assets. The 30–day mandatory notice period, removes the possibility of preventive judicial orders like asset freeze that have been proven essential and necessary as per UNCITRAL’s ATR recommendations for asset preservation. This judicial gap allows debtors to exploit specifically FEMA provisions for irreversible asset transfer.

The new amendment brings changes that are certainly going to be effective for the IBC. However, we must also not overlook the on-ground problems that might be created due to the changes in the code.

IBC gets very few opportunities to realize its true objectives, that of revival of financially distressed entities and their continuity as a going concern. In order to prevent the IBC from turning into a debt-recovery tool, it is essential to re-evaluate the Bill in light of the principles upon which the IBC is premised.