This study unfolds the debt–equity dynamics and the intricacies offirms’ leverage, financial traits and external factors – IBC implemen-tation, economic policy uncertainty and geopolitical risk. We alsoexamine the changing debt-pattern of Indian firms post-IBC imple-mentation. NSE 500 firms’ data spanning across 10 years (2014–2023) unveils conservative debt behaviour of firms, with the dom-inance of dynamic trade-off theory and the noteworthy impact ofEPU, GPR and IBC on debt adjustment. Indian firms appear to bedebt-sensitive; whilst no firm was unlevered either in terms of longor short-term debt, yet long-term debt appears to be the prefer-ence due to cost and flexibility.