TLDR: The Indian government, through the Insolvency and Bankruptcy Board of India (IBBI), is considering making the use of Artificial Intelligence (AI) agents mandatory for resolution professionals in insolvency proceedings. This move aims to significantly boost efficiency, transparency, and accuracy, addressing challenges like delayed case resolutions, fraudulent activities, and the overwhelming volume of financial data. Specialized AI tools are envisioned to streamline compliance, automate documentation, detect anomalies, and improve stakeholder communication.
New Delhi, October 3, 2025 – India is poised to revolutionize its judicial insolvency process by exploring the mandatory integration of Artificial Intelligence (AI) agents. The Insolvency and Bankruptcy Board of India (IBBI) is spearheading discussions to mandate AI use for resolution professionals (RPs) in insolvency proceedings, a strategic move designed to inject greater efficiency, transparency, and accuracy into the system.
According to a recent report from the IBBI, the adoption of AI is critical for tackling persistent challenges within the insolvency framework, including protracted case resolutions, the prevalence of fraudulent practices, and the sheer volume of financial data that professionals must meticulously analyze. The board’s vision is for AI tools to streamline compliance protocols, automate documentation, identify financial anomalies, and enhance communication among all stakeholders involved in the process.
Currently, insolvency professionals utilize AI applications, such as ChatGPT, primarily for tasks like summarizing legal judgments and aiding in legal research. However, the IBBI report underscores that a vast array of potential AI applications remain untapped. The report outlines several specialized AI agents tailored for insolvency processes. For instance, fraud detection agents could be deployed to identify preferential, undervalued, fraudulent, and extortionate (PUFE) transactions, uncover concealed assets, and flag other financial irregularities. Additionally, insolvency prediction agents could analyze historical data, financial records, and case-specific variables to forecast recovery outcomes and model various scenarios like asset liquidation or restructuring, assessing their potential results.
Experts believe that AI could dramatically accelerate the Insolvency and Bankruptcy Code (IBC) process. Ricky Chopra, chairman and chief counsel at RCIC, emphasized the transformative potential, stating, “Millions of documents can be scanned quickly to filter out false claims, which will shorten timelines and even improve e-auctions through automated price-setting algorithms.”
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This initiative aligns with global trends, as several countries are already incorporating AI into their insolvency practices. The UK’s National AI Strategy, launched in 2021, actively supports the use of AI in law enforcement, including insolvency. Similarly, Finland’s KOSTI platform leverages AI to enhance efficiency in its insolvency cases. With India’s burgeoning caseload under the IBC, the proposed integration of AI is seen as a crucial step towards modernizing and expediting the resolution process, ensuring a more robust and equitable insolvency ecosystem.
