Insolvency Overview

Understanding the Framework Under the Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code, 2016 (IBC) consolidated India's fragmented insolvency laws into a single, time-bound framework for resolving stressed companies, partnerships, and individuals. Whether you are a creditor, debtor, or stakeholder, understanding how the process works is essential before it begins.

We advise financial creditors, operational creditors, and corporate debtors on the insolvency resolution process — from filing an application before the NCLT to navigating the Corporate Insolvency Resolution Process (CIRP) and liquidation, where it becomes necessary.

Our Insolvency Advisory Services

CIRP Initiation Advisory

Advising financial and operational creditors on filing applications under Sections 7, 9, or 10 of the IBC before the NCLT.

Corporate Debtor Representation

Representing corporate debtors in insolvency proceedings, including responses and settlement negotiations.

Claims Filing Support

Assisting creditors in filing and substantiating claims with the Interim Resolution Professional or Resolution Professional.

Committee of Creditors Advisory

Advising members of the Committee of Creditors on resolution plan evaluation and voting strategy.

Resolution Plan Support

Assisting resolution applicants in structuring and submitting resolution plans under the CIRP framework.

Pre-Insolvency Restructuring

Advising stressed companies on restructuring options before formal insolvency proceedings become necessary.

Key Features of the IBC Framework

CIRP is intended to be completed within 180 days, extendable to 330 days including litigation time
A moratorium under Section 14 halts all suits, recovery actions, and asset transfers against the debtor once CIRP begins
Financial creditors form the Committee of Creditors, which approves the resolution plan by the requisite voting threshold
Operational creditors have a right to be heard but do not vote on the resolution plan
If no resolution plan is approved, the corporate debtor proceeds to liquidation under the Code
The Code applies to companies, LLPs, partnership firms, and individuals, each under distinct process chapters

Frequently Asked Questions

Who can initiate insolvency proceedings against a company?

Under the IBC, a financial creditor can file an application under Section 7, an operational creditor under Section 9 (after issuing a demand notice and awaiting the response period), and the corporate debtor itself can file under Section 10, all before the National Company Law Tribunal (NCLT), which is the adjudicating authority for corporate insolvency.

What is the minimum default amount required to trigger CIRP?

The minimum amount of default required to initiate CIRP against a corporate debtor is currently Rs. 1 crore, a threshold that was raised from the original Rs. 1 lakh through a notification issued in 2020, and it applies uniformly to financial and operational creditor applications.

What happens once CIRP is admitted?

Once the NCLT admits a CIRP application, an Interim Resolution Professional is appointed, the board of directors' powers are suspended, a moratorium under Section 14 comes into effect, and the process moves toward inviting resolution plans from prospective resolution applicants within the statutory timeline.

What is the difference between resolution and liquidation?

Resolution aims to keep the corporate debtor as a going concern by approving a viable resolution plan submitted by a resolution applicant, while liquidation is the fallback process where the company's assets are sold off and distributed to stakeholders under the statutory waterfall, typically pursued only if no resolution plan is approved.

Can a company be saved from liquidation once CIRP begins?

Yes, if the Committee of Creditors approves a viable resolution plan within the statutory timeline, the corporate debtor can be revived under new management or ownership as per the plan, which is the outcome the IBC is primarily designed to encourage over outright liquidation.

Navigate Insolvency Proceedings with Expert Guidance

Whether you are a creditor, debtor, or resolution applicant, we help you navigate the IBC process with clarity and strategy.

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