The article “The End of the “Settlement Exit”? — The Stricter Section 12A Regime Post-2026 Amendment” analyses the transformative impact of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 on the withdrawal of insolvency proceedings under Section 12A of the Insolvency and Bankruptcy Code (IBC), and examines how the amendment seeks to curb the misuse of settlement-driven exits after the admission of Corporate Insolvency Resolution Process (CIRP) proceedings. It further discusses key developments, including the closure of the pre-CoC window for withdrawal, the statutory bar on withdrawals after the issuance of Form G, the reinforcement of the 90% CoC approval threshold, and the recognition of CIRP as a proceeding in rem.
The article highlights that the 2026 amendment marks a significant shift in the insolvency framework by strengthening creditor confidence, safeguarding the interests of genuine resolution applicants, and reinforcing the IBC’s objective as a structured collective resolution mechanism rather than a tactical recovery tool. It also underscores the importance of preserving the integrity of the CIRP process while ensuring greater certainty and transparency in insolvency resolution.
