UPSC Prelims Practice Questions — India’s Insolvency Framework

Q1. With reference to how the Insolvency and Bankruptcy Code, 2016 differs from the pre-existing legal regime it replaced, consider the following statements: Which of the statements given above is/are correct?

  1. It consolidated the insolvency provisions applicable to corporate persons, partnership firms and individuals that were earlier scattered across multiple laws.
  2. Unlike the earlier SICA-based regime that emphasised debtor-driven revival, it introduced a predominantly creditor-driven and time-bound resolution process.
  3. It repealed the Companies Act in its entirety and became the sole law governing incorporation of companies in India.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. As per the Government's decadal stock-taking of the Insolvency and Bankruptcy Code, how many times has the IBC itself (i.e., legislative amendments to the Code) been amended since its enactment in 2016?

  • A. Four
  • B. Six
  • C. Sixteen
  • D. Twenty-two

Q3. With reference to the roles of the various institutions under the IBC framework, consider the following statements: Which of the statements given above is/are correct?

  1. The National Company Law Tribunal is the adjudicating authority for corporate insolvency, and appeals against its orders lie before the National Company Law Appellate Tribunal.
  2. The Insolvency and Bankruptcy Board of India is the regulator of the insolvency ecosystem, including the regulation of insolvency professionals.
  3. The Committee of Creditors is a body composed of operational creditors that approves the resolution plan.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. Which one of the following is the nodal Ministry for the administration of the Insolvency and Bankruptcy Code, 2016?

  • A. Ministry of Finance
  • B. Ministry of Corporate Affairs
  • C. Ministry of Law and Justice
  • D. Ministry of Commerce and Industry

Q5. In the pre-IBC framework, which one of the following bodies was specifically tasked with the revival and rehabilitation of sick industrial companies?

  • A. Debt Recovery Tribunal
  • B. Board for Industrial and Financial Reconstruction
  • C. Securitisation company under SARFAESI
  • D. Lok Adalat

Q6. Consider the following mechanisms/institutions with reference to recovery of debts in India before the enactment of the IBC. Which of the above is/are NOT correctly described as a pre-IBC recovery mechanism?

  1. Sick Industrial Companies (Special Provisions) Act, 1985
  2. Recovery of Debts Due to Banks and Financial Institutions Act, 1993
  3. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
  4. Insolvency and Bankruptcy Board of India, established as the sectoral regulator
  • A. 1 and 2
  • B. 2 and 3
  • C. 3 only
  • D. 4 only

Q7. Under the creditor-initiated insolvency resolution process (CIIRP) introduced by the IBC (Amendment) Act, 2026, notified financial creditors holding at least what proportion of the debt (by value) may initiate the process?

  • A. 51 per cent
  • B. 66 per cent
  • C. 75 per cent
  • D. 100 per cent

Q8. The creditor-initiated insolvency resolution process (CIIRP) and the enabling framework for group insolvency were introduced into India's insolvency law by which one of the following?

  • A. The original Insolvency and Bankruptcy Code, 2016
  • B. The IBC (Second Amendment) Act, 2019
  • C. The IBC (Amendment) Act, 2021
  • D. The IBC (Amendment) Act, 2026

Q9. As per the Government's ten-year review of the IBC (till March 2026), which one of the following channels accounted for the largest share of the amounts recovered by Scheduled Commercial Banks through various recovery routes?

  • A. The IBC process
  • B. The SARFAESI Act route
  • C. Debt Recovery Tribunals
  • D. Lok Adalats

Q10. Consider the following statements regarding the Corporate Insolvency Resolution Process (CIRP) under the IBC. Which of the above is/are NOT correct?

  1. The CIRP must ordinarily be completed within 180 days, with a one-time extension of up to 90 days.
  2. A moratorium under Section 14 takes effect from the insolvency commencement date.
  3. A resolution plan requires approval of the Committee of Creditors by a 66% voting share.
  4. The CIRP, including any time spent in litigation, must mandatorily conclude within 270 days.
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 4

Q11. The pre-packaged insolvency resolution process (Chapter III-A of the IBC) was designed principally as a resolution route for which one of the following categories of corporate debtors?

  • A. Listed companies above a specified market capitalisation
  • B. Micro, small and medium enterprises
  • C. Financial service providers
  • D. All corporate persons irrespective of size

Q12. With reference to India's cross-border insolvency framework and the UNCITRAL Model Law, consider the following statements. Which of the statements given above is/are correct?

  1. The IBC (Amendment) Act, 2026 empowers the Central Government to frame rules for cross-border insolvency aligned with the UNCITRAL Model Law.
  2. The UNCITRAL Model Law distinguishes 'main' foreign proceedings from 'non-main' proceedings on the basis of the debtor's centre of main interests.
  3. The framework contemplates recognition by Indian courts of foreign insolvency proceedings and cooperation with foreign representatives.
  4. A fully operational cross-border insolvency mechanism already existed under the original IBC, 2016.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2 and 4 only
  • D. 1, 3 and 4