The Insolvency and Bankruptcy Board of India (IBBI) has released draft regulations mandating that banks must secure financial creditor approval for significant transactions involving distressed firms. This requirement is part of the new 'debtor-in-possession' model introduced under the Insolvency and Bankruptcy Code (Amendment) Act of 2026, which received presidential assent on April 6. The model aims to expedite business rescues while allowing existing management to remain in control, contrasting with traditional bankruptcy procedures where a resolution professional takes over. Under the proposed regulations, once a financial creditor initiates the process, lenders have 50 days to invite bids, and potential investors have 15 days to submit their plans, with a moratorium on recoveries during this period. The eligibility criteria for accessing this process will be specified by the Ministry of Corporate Affairs. Additionally, the IBBI has introduced regulations concerning voluntary liquidation and personal guarantors, enhancing the framework for insolvency resolution in India. Experts believe that if implemented effectively, these changes could strengthen the insolvency ecosystem by providing creditors with more options for early intervention while maintaining necessary safeguards.