The Insolvency and Bankruptcy Code (IBC), now a decade old, is evolving from crisis response to proactive preparedness. According to reports from Business Standard, the pre-packaged insolvency process introduced in 2021 requires smaller companies to prepare base resolution plans before filing, while recent amendments enable creditors to initiate resolution earlier and outside the courtroom. The Financial Stability Board's Key Attributes have institutionalized crisis preparedness as an institution's own responsibility, building on lessons from the 2008 global financial crisis that demonstrated enormous costs of disorderly failures.
For real-sector companies, resolvability should evolve through market discipline rather than regulatory command, initially among larger and more leveraged firms where preparedness gains are greatest. As reported by Business Standard, a resolvable company maintains critical assets within the company, avoids avoidable encumbrances, and keeps records current to ensure business can be transferred as a going concern rather than reconstructed through litigation. The framework addresses the shrinking company lifespan, with many firms failing not because they are beyond rescue but because they are unprepared for it.
The second dimension of resolvability involves a standing rescue plan - a corporate living will that can be activated when distress emerges. According to the analysis, this combines an information dossier with an operational playbook, recording ownership structure, financial information, material contracts, encumbrances, litigation, and current information memorandum. The accompanying playbook provides step-by-step guidance on value preservation, asset protection, business divestment options, and financing alternatives.
Artificial intelligence is compressing business cycles and accelerating distress emergence, giving companies less time to recognize distress and organize rescue. As reported by Business Standard, those maintaining resolvability can respond immediately while those beginning preparation only after distress strikes may find rescue windows already closed. An independent resolvability index could assess companies' structural and informational preparedness, with regulators developing common assessment frameworks and piloting voluntary disclosure regimes.
Resolvable companies are inherently more valuable because they are easier to rescue, with investors and lenders recognizing this quality through lower borrowing costs, stronger valuations, and greater confidence. According to the analysis, resolvability separates business failure caused by economic reality from failure arising from lack of preparedness, with the IBC repeatedly demonstrating that easier companies to understand and transfer as going concerns have greater rescue likelihood. The framework emphasizes that corporate living wills are about improving survival chances rather than managing failure.
