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Are there major changes in the Insolvency and Bankruptcy Code (IBC) on the cards? According to sources, the country's bankruptcy law could see a major overall during the upcoming Winter Session of Parliament, which typically commences in late November and runs for a month. Among the proposed changes, industry stakeholders have sought the existing rules regarding related parties and blood relations to be revised, in order to ensure 'ease of doing business' on the ground.

The IBC has undergone six major amendments since its enaction in 2016. This time, the 2025 IBC Amendment Bill could bring the biggest set of changes, according to the sources.

This comes at a time when the industry is demanding revisions in certain provisions that are slowing down the IBC process. For instance, Section 29A of the law states that the promoter of a company undergoing insolvency and their blood relatives cannot participate in the insolvency proceedings, even if they have no business relationship with the promoter.

Industry stakeholders also argue that this section should be modified to allow relatives to take part in the resolution process.

What is Section 29A of IBC all about?

Section 29A determines who is not allowed to bid for or take over a company that has gone bankrupt. The main idea is to stop the old owners who caused the company’s financial trouble from getting it back at a cheaper valuation through the insolvency route.

This section basically lists a group of people who cannot participate in the insolvency resolution or takeover, such as:

According to experts, before allowing such participation, authorities should verify the source of funds.

If everything is found to be clean, then relatives should be permitted to participate, they add.

"Stakeholders are presenting their views before the Select Committee chaired by Baijayant Panda regarding the IBC amendments. During this consultation, industry bodies are recommending changes to Section 29A," according to GP Madaan, Managing Partner, Madaan Law Offices.

Experts also say that disputes within businesses are a major reason behind many insolvency cases.

In such situations, treating blood relatives automatically as related parties reduces the chances of reviving a company. A blood relative may be a creditor or may simply be involved in business separately, and, therefore, denying participation in IBC proceedings solely due to a family relationship cannot be justified.

The Supreme Court has ruled that someone should be considered a related party only when there is a business relationship, not just a family relationship, say experts.

If Section 29A is amended, several large corporate groups in the country would be able to participate in IBC proceedings for companies run by their family members, according to Pawan Vijay, Founder, Corporate Professionals.