CCI Approval Timing in IBC Amendment Bill: A Well-Intentioned Amendment That Could Backfire

The Government has proposed a significant change to how competition approvals work in insolvency cases through the IBC Amendment Bill, 2025. Currently, if a resolution plan involves a merger or acquisition that needs Competition Commission of India (CCI) approval, the resolution applicant must get this approval before the Committee of Creditors (CoC)'s approval. The new amendment wants to flip this around, allowing resolution applicants to get CCI approval after CoC approval but before the NCLT gives final sanction.

This change stems directly from the Supreme Court's January 2025 judgment in the HNG case (Independent Sugar Corporation Limited v. Girish Sriram Juneja), which created significant disruption in the insolvency regime. In that case, AGI Greenpac had won the bidding for HNG Industries with a 98% CoC approval, but the Supreme Court later set aside the entire resolution because AGI had not obtained CCI approval before the CoC voted. The Court ruled that AGI's resolution plan was "unsustainable" and quashed the CoC approval, forcing the entire process to restart. This harsh outcome prompted the Government to propose the current amendment to prevent similar disruptions.

However, this amendment creates a much bigger problem than the one it tries to solve. The issue lies in a fundamental conflict with the Supreme Court's earlier Ebix Singapore Private Ltd. v. Committee of Creditors of Educomp Solutions Ltd. judgment from 2021, which established that once the CoC approves a resolution plan, it becomes final and binding on all parties. In Ebix, the court clearly stated that there is "no scope for negotiations between parties once the Resolution Plan has been approved by the CoC" and that any conditions allowing modifications would make the process "indeterminate and unpredictable." This means that once the CoC gives its approval, the resolution plan cannot be changed, modified, or renegotiated under any circumstances.

The problem is that CCI doesn't always give simple yes-or-no approvals. When CCI examines mergers and acquisitions, it sometime requires structural changes to address competition concerns. These can include asking companies to sell certain factories or business divisions, restricting how they operate in specific markets, or completely restructuring the deal. In the HNG case itself, CCI gave conditional approval but required AGI to "hive off or divest the Rishikesh Plant." Such structural remedies fundamentally change the nature of the acquisition and would require major modifications to the resolution plan that the CoC had already approved.

Under the proposed amendment, resolution applicants will face an impossible situation. If CCI requires structural changes after CoC approval, how can these changes be incorporated into a plan that the Ebix judgment says is final and cannot be modified? This creates a legal deadlock where the plan cannot be implemented as approved by the CoC, but also cannot be changed to meet CCI's requirements. The only outcome would be the collapse of the entire resolution process and mandatory liquidation of the company.

The timing makes this problem even worse. CoC approvals typically happen very late in the insolvency process. This leaves very little time for CCI to conduct its investigation. While simple cases might get cleared in 30 days under Phase 1 review, complex cases involving market dominance or significant overlaps require Phase 2 investigation, which can take an additional 120 working days. With the tight timelines of insolvency proceedings, there simply isn't enough time for thorough competition review after CoC approval.

The amendment appears to assume that all insolvency-related acquisitions will sail through CCI's Phase 1 review without problems, treating competition approval as a mere formality. This assumption is clearly wrong, as demonstrated by the HNG case where the initial Form I application was rejected and the matter had to go through the detailed Form II process with conditional approval. Many insolvency cases involve large companies with significant market shares, making them prime candidates for detailed Phase 2 investigation by CCI.

There's also a basic question of fairness and consistency. In regular, non-distressed mergers and acquisitions where companies compete through bidding, each bidder must obtain CCI approval before submitting their final bid. This ensures all bidders are competing on a level playing field with cleared, implementable proposals. Why should distressed acquisitions under IBC follow different rules? If anything, insolvency cases may involve larger, more complex companies where competition concerns are likely to be more significant, not less.

The amendment creates additional commercial problems for potential resolution applicants. Under the proposed framework, bidders would need to invest substantial time, money, and effort in preparing detailed resolution plans, conducting due diligence, and negotiating with the CoC, all without knowing whether their acquisition will ultimately receive competition clearance. If CCI later rejects the combination or imposes structural conditions that make the deal unviable, the resolution applicant has no way to withdraw or modify their plan due to the Ebix binding principle. This uncertainty will likely discourage serious bidders from participating in competition-sensitive insolvency cases, reducing the pool of potential buyers and ultimately harming creditor recoveries.

The proposed amendment also ignores the practical complexity of implementing structural remedies. When CCI requires divestiture of specific assets or business units, this involves complex legal and commercial arrangements including the establishment of separate entities, transfer of licenses and permits, restructuring of supplier and customer relationships, and revision of financial projections. These changes cannot be simply grafted onto a resolution plan that has already been finalised by the CoC with detailed commercial terms and conditions.

Furthermore, the amendment creates procedural chaos between different regulatory timelines. The new rules require NCLT to approve resolution plans within 30 days of receipt, but CCI investigations, especially Phase 2 reviews, cannot be compressed into such tight deadlines without compromising the quality of competition assessment. This mismatch will either force CCI to make hasty decisions or require repeated extensions of insolvency timelines, defeating the time-bound nature of the IBC.

Rather than solving the problem identified in HNG, this amendment will create systemic failures in cases involving significant competition concerns. Resolution applicants will find themselves caught between irreconcilable legal requirements with no statutory mechanism to resolve conflicts between CCI's modification demands and the Ebix prohibition on plan changes. Courts will face the impossible task of reconciling statutory requirements for CCI approval, judicial precedents preventing plan modifications, and competition law demands for structural changes.

The amendment needs fundamental rethinking before it becomes law. A better approach would be to maintain the current pre-CoC approval requirement while creating streamlined procedures for obtaining CCI clearances during the early stages of the resolution process. The legislature should also consider automatic timeline extensions for regulatory delays. Without these changes, the amendment risks transforming the HNG problem from an isolated issue into a systemic breakdown of the insolvency resolution framework for all competition-sensitive transactions.

#CCI #IBC #IBCAmendment #competitionlaw #IBBI

This is the first article in our comprehensive series analysing key issues in the IBC Amendment Bill, 2025. We'll be examining each major provision and its practical implications for insolvency practitioners and other stakeholders.