Sections 26 and 27 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 26 says that filing an application about a questionable transaction does not stall the corporate insolvency resolution process. Section 27 lets the committee of creditors replace the resolution professional. This article reads section 27 as per the IBBI consolidated text of the Code amended up to 12 August 2021, and section 26 in the form the Insolvency and Bankruptcy Code (Amendment) Act, 2026 substitutes, with the old text given once for comparison.
Section 26, as substituted by the 2026 Act, says that filing an application in respect of an avoidance transaction, fraudulent or wrongful trading, or under section 47 does not affect the corporate insolvency resolution process or the liquidation process, and that completion of the process does not end those proceedings. Section 27 lets the committee of creditors replace the resolution professional by a vote of sixty-six per cent. of voting shares, with a written consent from the proposed professional, an application to the Adjudicating Authority and Board confirmation.
Section 26 after the 2026 Act
Section 16 of the Amendment Act, 2026 (No. 6 of 2026) substitutes section 26. The new section reads: "The filing of an application in respect of an avoidance transaction or fraudulent or wrongful trading or under section 47, shall not affect the proceedings of the corporate insolvency resolution process or the liquidation process, as the case may be."
An Explanation follows: "For the removal of doubts, it is hereby clarified that the completion of the corporate insolvency resolution process or the liquidation process shall not affect the continuation of proceedings in respect of an avoidance transaction or fraudulent or wrongful trading or under section 47, as the case may be."
Two rules are therefore stated. Filing such an application does not hold up the process, and finishing the process does not end the application. The marginal heading in the Act is "Application in respect of certain transactions or trading not to affect processes". The terms "avoidance transaction" and "fraudulent or wrongful trading" come from the new clauses (2A) and (9A) of section 5 (see our section 5 article); section 47, which is also substituted, is covered in the article on sections 46 to 48.
Section 26 before the 2026 Act
As printed in the consolidated text, section 26 was headed "Application for avoidance of transactions not to affect proceedings" and read: "The filing of an avoidance application under clause (j) of sub-section (2) of section 25 by the resolution professional shall not affect the proceedings of the corporate insolvency resolution process." It dealt only with the resolution professional's filing under section 25(2)(j) and only with the corporate insolvency resolution process; see the section 25 article.
The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether this substitution has been notified.
If an avoidance or wrongful-trading application is pending in your matter and you are unsure how it interacts with the process, a legal dispute resolution review of the filings can clarify the position.
Section 27: replacement by the committee of creditors
Section 27 is not amended by the 2026 Act. Its five sub-sections run as follows.
| Sub-section | Rule |
|---|---|
| (1) | Where at any time during the process the committee of creditors is of the opinion that a resolution professional appointed under section 22 is required to be replaced, it may replace him with another resolution professional in the manner provided under section 27 |
| (2) | The committee may, at a meeting, by a vote of sixty-six per cent of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form |
| (3) | The committee shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority |
| (4) | The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for confirmation and a resolution professional shall be appointed in the same manner as laid down in section 16 |
| (5) | Where any disciplinary proceedings are pending against the proposed resolution professional under sub-section (3), the resolution professional appointed under section 22 shall continue till the appointment of another resolution professional under this section |
Sub-section (1) prints "the committee or creditors", a slip for "of"; it is quoted as printed. Sub-section (2) prints "sixty-six per cent" with no full stop after "cent" while elsewhere the Code writes "per cent."; also quoted as printed. The vote here matches the sixty-six per cent. in section 22(2), which governs the first-meeting decision; see the sections 22 and 23 article. Appointment under section 16 is covered by the live post on section 16.
Example. Midway through the process of Sethi Fabrics Limited, the committee of creditors decides, by sixty-six per cent. of voting shares, to replace the resolution professional, obtains the written consent of an insolvency professional and forwards the name to the Adjudicating Authority, which forwards it to the Board. A disciplinary proceeding is pending against the proposed professional. Sub-section (5) says the existing resolution professional continues until another is appointed under the section.
Points to note
- Section 27 applies "at any time" during the process. The committee need not wait for any event.
- Written consent from the proposed professional is part of the vote under sub-section (2).
- The Board confirms; the professional is appointed in the manner of section 16.
- Pending disciplinary proceedings against the proposed professional keep the existing resolution professional in place (sub-section 5).
- Section 23(1) makes the resolution professional's conduct of the process "subject to section 27".
Rules, regulations and later texts
The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 carry the specified detail; the copy consulted is amended up to 09-06-2026 as printed under its title. Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help with a replacement or an avoidance filing?
Replacing a resolution professional or running an avoidance application alongside the process raises questions about timing and records. A legal dispute resolution team can review the vote, the consent and the filings with you.
Key takeaways
- Section 26 as substituted keeps avoidance and wrongful-trading filings, and section 47 applications, from stopping the process, and keeps them alive after it ends.
- The old section 26 covered only the resolution professional's avoidance application under section 25(2)(j).
- The committee may replace the resolution professional at any time by a vote of sixty-six per cent. of voting shares with written consent.
- The Adjudicating Authority forwards the name to the Board; appointment follows section 16.
- Pending disciplinary proceedings against the proposed professional leave the existing professional in place.
Read next
- Section 25: duties of the resolution professional
- Section 28: actions needing prior approval of the committee
- Sections 46 to 48: undervalued transactions
- Avoidance transactions in the 2026 Act
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.