1. Introduction

While the IBC does not yet codify a comprehensive group insolvency regime, the 2026 Amendment strengthens the functional groundwork for group treatment through provisions relating to:

• Guarantors
• Interconnected entities
• Asset transfers across entities

2. Concept of Group Insolvency

Group insolvency involves coordinated resolution of multiple related entities, such as:

• Holding and subsidiary companies
• Companies with common control
• Entities linked through guarantees or shared assets

The objective is:

• Maximisation of value
• Avoidance of fragmented proceedings
• Efficient resolution of interdependent businesses

3. Key Developments under the 2026 Amendment

(A) Transfer of Guarantor Assets (Section 28A)

A major step toward group insolvency is Section 28A:

• Allows transfer of assets of:
  
  • Personal guarantors
  • Corporate guarantors
• During CIRP of the principal debtor
• With approval of Committee of Creditors (CoC)

Significance

• Recognizes economic unity of debtor and guarantor
• Enables integrated resolution strategy

(B) Treatment of Corporate Guarantors

Where a corporate guarantor is also under CIRP/liquidation:

• Transfer requires approval of its CoC (≥ 66%)
• Proceeds form part of its insolvency estate

This ensures:

• Coordination between parallel proceedings
• Protection of stakeholder interests across entities

(C) Personal Guarantor Coordination

For personal guarantors:

• Approval by ¾ majority of creditors
• Proceeds integrated into guarantor’s process

(D) Preservation of Proceedings Across Processes (Section 26)

• Avoidance and fraudulent trading proceedings continue independently
• Completion of CIRP/liquidation does not terminate such actions

This supports:

• Cross-entity recovery actions
• Broader group-level accountability

(E) Expanded Definition of Resolution Scope

Amendment to Section 5:

• Includes sale of assets through multiple plans
• Facilitates modular or group restructuring strategies

4. Judicial Evolution (Contextual)

Even prior to statutory recognition, tribunals have:

• Allowed consolidation of CIRPs
• Recognized group-level economic realities

The 2026 amendment now provides statutory support to such approaches.

5. Practical Models of Group Insolvency

Post-amendment, group insolvency may operate through:

(a) Procedural Coordination

• Separate CIRPs but coordinated timelines and CoCs

(b) Substantive Consolidation (Limited)

• Pooling of assets/liabilities (still evolving)

(c) Guarantor Integration

• Via Section 28A transfers

6. Benefits of Group Insolvency Approach

• Maximises enterprise value
• Prevents value destruction through piecemeal liquidation
• Enables holistic restructuring
• Aligns with global best practices (UNCITRAL models)

7. Challenges

• Absence of a comprehensive statutory framework
• Inter-creditor conflicts across entities
• Jurisdictional and procedural complexity
• Risk of unequal treatment of stakeholders

8. Way Forward

The 2026 Amendment signals a transition toward formal group insolvency law. Future reforms may include:

• Statutory provisions for substantive consolidation
• Common resolution professionals
• Unified CoC mechanisms

9. Conclusion

While India still lacks a codified group insolvency regime, the 2026 amendments—particularly Section 28A and related provisions—lay a strong foundation. The law is clearly evolving toward recognizing the commercial reality of interconnected corporate structures, paving the way for a full-fledged group insolvency framework.