Under the 2026 IBC amendments, fraudulent transfers no longer lapse when the insolvency ends

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 received the President's assent on 6 April 2026. According to the Insolvency and Bankruptcy Board of India, the Ministry of Corporate Affairs brought it into force from 26 May 2026 by a notification dated 22 May, except for the provisions on group insolvency, cross-border insolvency, the creditor-initiated insolvency resolution process and the Insolvency and Bankruptcy Fund.

Several changes deal with transactions that drain a company before it fails. The Act now defines an "avoidance transaction" by reference to sections 43, 45, 49 and 50 of the Code, which cover preferential transactions, undervalued transactions, transactions defrauding creditors and extortionate credit. It defines "fraudulent or wrongful trading" by reference to section 66.

A new section 26 makes clear that completing the resolution or liquidation process does not stop proceedings on those transactions. A substituted section 47 lets a creditor, alone or with others, or a member or partner, apply to the Adjudicating Authority where such a transaction or trading took place and the resolution professional or liquidator did not report it. If the Authority finds that the professional had enough information or opportunity and still did not report it, it must direct the IBBI to begin disciplinary proceedings. The look-back periods in sections 43, 46 and 50 now run from a point before the initiation date to the insolvency commencement date, and a liquidator, as well as a resolution professional, may now bring an application under section 66.

Accountability on both sides

Resolution professionals have always been expected to look for these transactions. What changes is the cost of missing one. A professional who fails to report a transaction that a creditor later proves faces a disciplinary referral, and the claim no longer falls away once a plan is approved or the company is liquidated. Creditors with large exposure now have good reason to commission their own review rather than rely only on the professional's.

Money that left before the insolvency is often the money that can still be recovered. The 2026 amendments make it harder to stop looking.

What a defensible transaction review covers

• Every payment, transfer and asset sale in the look-back period, matched to counterparties and their beneficial owners.
• A map of related parties, including entities linked to directors and promoters through relatives, nominees or shared addresses.
• Valuation of assets sold or transferred, to test for undervalue.
• Credit terms that were extortionate, and repayments that favoured one creditor over the others.
• Trading that continued after the directors knew, or ought to have known, that insolvency could not reasonably be avoided.
• Findings traced to records and built to the standard the tribunal will apply.

Questions for lenders and investors

• For stressed borrowers, do we know their related-party map today, before any insolvency begins?
• If a professional's report is silent on avoidance transactions, have we tested that silence ourselves?
• Do we hold the records we would need to file our own application under section 47?
• When buying a distressed asset, does our diligence cover avoidance proceedings that continue after the plan?