Quick answer: Group insolvency under IBC now has a statutory base in Section 59A (Chapter VA), added by the IBC (Amendment) Act, 2026. However, the Centre has not notified it or framed its rules. Until then, NCLTs coordinate group cases through case law, such as the Videocon consolidation and the Supreme Court’s 2026 ruling permitting parallel CIRPs.
Banks and NBFCs rarely lend to a single company. They lend to groups, where a holding company borrows and its subsidiaries guarantee. When that group fails, lenders ask one question: how does group insolvency under IBC work? This guide explains the new Section 59A, its current status, and what courts allow today.
What Is Group Insolvency Under IBC?
Group insolvency means resolving two or more connected companies in a coordinated way. Without it, each company runs its own CIRP. Each has its own resolution professional, its own committee of creditors and its own bidders. As a result, lenders often see fragmented bids and lower recoveries.
The IBC (Amendment) Act, 2026 received assent on 6 April 2026. Section 42 of that Act inserts Chapter VA, containing Section 59A. It lets the Central Government frame rules for coordinated proceedings against group companies linked by control or significant ownership.
Commentators report that the rules may provide for:
- a common NCLT bench for all group companies;
- a common insolvency professional;
- a group committee of creditors and coordination between separate CoCs;
- binding coordination agreements; and
- allocation of process costs among group companies.
Is Section 59A in Force?
No. The Centre issued notification S.O. 2625(E) on 22 May 2026. It brought most of the Amendment Act into force from 26 May 2026. However, it left out Section 42 (group insolvency). It also left out the creditor-initiated process, cross-border insolvency under Section 240C and the Insolvency and Bankruptcy Fund.
Commentary tracking the IBBI notification list shows no later notification as of 28 October 2026. Moreover, Section 59A only works through rules, and the Centre has not published them. The position mirrors the creditor-initiated insolvency resolution process (CIIRP), which also awaits notification.
Key Case Law on Group Insolvency
State Bank of India v. Videocon Industries (NCLT Mumbai, 2019)
By an order dated 8 August 2019, the NCLT consolidated 13 of 15 Videocon group companies into one CIRP. Separate processes had drawn no bids. The tribunal weighed factors such as common control, common directors, intertwined accounts, pooling of resources and common financial creditors. It kept out two companies that could survive alone.
Edelweiss ARC v. Sachet Infrastructure (NCLAT, 2019)
This appeal concerned the CIRPs of nine Era group real-estate companies, including guarantors of Adel Landmarks. It remains a frequently cited NCLAT ruling on coordinating group CIRPs. Lenders should read the full order before relying on its final directions.
ICICI Bank v. Era Infrastructure (Supreme Court, 2026 INSC 201)
On 26 February 2026, the Supreme Court held that a creditor may run CIRPs against a principal borrower and its corporate guarantor at the same time. The Court rejected the NCLAT’s “one debt, one CIRP” view. Still, creditors cannot recover more than the amount actually due. They must update claims under Regulation 12A when they receive any payment.
Checklist for Banks and NBFCs Facing a Group Default
- Map the group. Chart every borrower, guarantor and security provider, with cross-holdings.
- File where it helps. After the 2026 ruling, consider Section 7 petitions against both borrower and corporate guarantors.
- Seek one bench. Ask the NCLT to list connected petitions together and hear them jointly.
- Press for a common RP. Propose the same insolvency professional across group CIRPs through CoC votes.
- Test consolidation. Gather evidence of intertwined accounts and shared assets before seeking a Videocon-style order.
- Avoid double recovery. Track receipts across every CIRP and update claims promptly.
- Watch the Gazette. Review your strategy once the Centre notifies Section 59A and its rules.
Complex group matters need early coordination. Our IBC and NCLT lawyers in Delhi help lenders plan filings across connected companies.
FAQs on Group Insolvency Under IBC
Does the IBC provide for group insolvency?
Yes. The 2026 Amendment inserts Section 59A in a new Chapter VA. It lets the Centre make rules for coordinated insolvency of group companies.
Is group insolvency under the 2026 Amendment in force?
No. The 22 May 2026 notification left out Section 42 of the Amendment Act. Reports show no rules or later notification as of 28 October 2026.
What is substantive consolidation in IBC?
It means pooling the assets and liabilities of group companies into one CIRP. The NCLT Mumbai ordered it for 13 Videocon companies in 2019.
Can a bank file CIRP against both the borrower and its corporate guarantor?
Yes. In ICICI Bank v. Era Infrastructure (2026), the Supreme Court allowed parallel CIRPs for the same debt. However, the creditor cannot recover more than its dues.
Can one resolution professional handle all group companies?
Nothing in the IBC prevents it. Each CoC must approve the appointment, and NCLTs have accepted common professionals in group cases.
Does group insolvency cover foreign subsidiaries?
Not yet. Cross-border insolvency under Section 240C also awaits notification and rules.
Lex Pleaders advises banks, NBFCs and businesses on group insolvency, parallel CIRPs and NCLT strategy as a law firm in Delhi NCR. Write to us at lexpleadersindia@gmail.com to discuss your matter.
Disclaimer: This article offers general information only and does not constitute legal advice.