Our firm offers expert legal services under the Insolvency and Bankruptcy Code (IBC), 2016, a unified statute that significantly improved insolvency operations in India. Recently amended to raise the minimum pecuniary jurisdiction for filing an insolvency case to one crore (from the previous threshold of one lakh), the IBC provides a comprehensive framework applicable to companies, partnerships, and individuals, designed to facilitate economic relief and reorganization.

Contrary to common misconceptions, the IBC does not serve as a debt recovery tool but rather as a mechanism that aims to revitalize or liquidate distressed entities, focusing on maximizing asset value while balancing stakeholder interests. It provides a statutory process that facilitates either reorganization or bankruptcy under judicial or liquidator oversight.

Who May Initiate the Corporate Insolvency Resolution Process (CIRP)?

The Corporate Insolvency Resolution Process (CIRP) can be initiated by:

•   Financial Creditors: Creditors to whom a financial debt is owed.
•   Operational Creditors: Creditors to whom an operational debt is owed, covering claims for goods or services, employment dues, or amounts owed to governmental authorities.

An operational creditor can initiate the process by issuing a demand notice under Section 8 of the IBC, 2016, to the corporate debtor. Upon receipt, the corporate debtor has ten days to respond with a notice of dispute or proof of payment.

If no response is received within this period, the operational creditor may file an application before the National Company Law Tribunal (NCLT) under Section 9 to initiate CIRP, and may also propose an interim resolution professional. The NCLT reviews the application and, within 14 days, either:

•   Admits the application if it is complete, no payment or dispute notice has been issued, and there is no pending disciplinary action against the proposed resolution professional.
•   Rejects the application if it is incomplete, payment has been made, a dispute notice exists, or a disciplinary proceeding is pending.

Persons Ineligible to Initiate CIRP

The following parties cannot initiate CIRP:

•   Corporate debtors currently undergoing a CIRP.
•   Corporate debtors who completed CIRP within the past 12 months.
•   Parties violating terms of an approved resolution plan within the last 12 months.
•   Corporate debtors subject to a liquidation order.

Timeline for CIRP Completion

According to Section 12 of the IBC, CIRP must be completed within 180 days from the date of application admission. In cases requiring an extension, the Committee of Creditors (CoC) can vote to extend this period by up to 90 days with a 75% majority.

Following application admission under Sections 7, 9, or 10, the NCLT orders:

•   A moratorium under Section 14.
•   A public announcement of CIRP initiation.
•   Appointment of an interim resolution professional as per Section 16 of the IBC.

Our Services Under the Insolvency and Bankruptcy Code

We offer clients comprehensive support throughout the IBC process, with services including:

•   Corporate Insolvency Resolution Process Assistance: From filing notices under Section 8 to submitting applications under Section 9 before NCLT.
•   Consultancy for Debtors and Creditors: Advisory on compliance and strategy for insolvency and bankruptcy.
•   Corporate Restructuring: Guidance on restructuring distressed assets and businesses to facilitate recovery or liquidation as required.

Our team of skilled practitioners provides dedicated support at every stage of the IBC process, ensuring efficient and thorough representation before the NCLT and the Insolvency and Bankruptcy Board of India (IBBI). We are committed to helping clients navigate the complexities of insolvency law with the highest level of expertise and diligence.