CIRP Under IBC: Complete Guide to Initiation, Sections 7, 9, 10 & 95–100 and Post-Admission Process
The Corporate Insolvency Resolution Process (CIRP under IBC) has transformed India’s insolvency ecosystem since the enactment of the Insolvency and Bankruptcy Code, 2016. Notably, CIRP has already facilitated resolution of stressed assets exceeding ₹3 lakh crore, thereby strengthening creditor confidence and improving recovery outcomes.
Whenever a corporate debtor commits default of ₹1 crore or more, stakeholders may initiate CIRP under IBC to revive the business as a going concern. Moreover, the process focuses on value maximisation through resolution plans approved by the Committee of Creditors (CoC). However, if revival fails, liquidation follows within the statutory limit of 330 days.
Importantly, CIRP initiation differs based on the applicant:
Sections 7, 9 and 10 – For corporate debtors
Sections 95–100 – For personal guarantors
Each route involves distinct documentation, evidentiary standards, and procedural safeguards.
Table of Contents
What Is CIRP Under IBC?
CIRP under IBC is a creditor-driven, time-bound mechanism that aims to resolve insolvency by restructuring a distressed company. Instead of dismantling the business immediately, the Code prioritizes revival.
Therefore, once the NCLT admits an application, it:
Declares moratorium under Section 14
Appoints an Interim Resolution Professional (IRP)
Freezes existing management powers
Begins the resolution framework
Consequently, control shifts from promoters to an independent professional.
Who Can Initiate CIRP Under IBC?
Different stakeholders may initiate CIRP under IBC, depending on the nature of the debt.
Financial Creditors: Section 7
Banks, NBFCs, bondholders, and financial institutions may file under Section 7.
Key Features:
No demand notice required
Proof of default via Information Utility or financial records
No defence of “pre-existing dispute” available
Faster admission rates
Thus, Section 7 remains the most powerful initiation route.
Operational Creditors – Section 9
Vendors, suppliers, and employees may initiate CIRP under Section 9.
Requirements:
Demand notice (Form 3 or 5)
10-day waiting period
Proof of invoice and delivery
No pre-existing dispute
However, even a genuine dispute can defeat the petition.
Corporate Debtor: Section 10
A company itself may voluntarily initiate CIRP under IBC.
Why Companies Use Section 10:
Proactive restructuring
Shield from creditor actions
Strategic use in pre-packaged insolvency
Although rare, Section 10 reflects responsible corporate governance.
CIRP Under IBC for Personal Guarantors (Sections 95–100)
Sections 95–100 govern the insolvency of individuals who guarantee corporate debt.
Salient Points:
Only financial creditors can file
Interim moratorium begins immediately
Resolution Professional submits a report to NCLT
If no repayment plan exists, a bankruptcy order follows
Unlike corporate CIRP, this process focuses on individual rehabilitation.
Admission of CIRP Under IBC by NCLT
The NCLT must decide admission within 14 days.
Once admitted:
Moratorium under Section 14 applies
IRP is appointed
Public announcement is issued
Therefore, CIRP formally commences.
Post-Admission Process in CIRP Under IBC
Step 1: Public Announcement
IRP invites claims from all creditors.
Step 2: Verification of Claims
IRP verifies and collates creditor claims
Step 3: Constitution of the Committee of Creditors
Only financial creditors form CoC with voting rights.
Step 4: First CoC Meeting
CoC confirms or replaces IRP as Resolution Professional (RP).
Step 5: Information Memorandum
RP prepares the Information Memorandum (IM).
Step 6: Invitation of Resolution Plans
RP invites Expressions of Interest and resolution plans.
Step 7: Approval of Resolution Plan
CoC approves plan with 66% voting majority.
Step 8: NCLT Approval
NCLT sanctions plan under Section 31.
Thus, the company exits CIRP as a revived entity.
CIRP Timeline Under IBC
180 days – Base period
90 days – One-time extension
Maximum 330 days
If no plan is approved, liquidation begins under Section 33.
Moratorium Under Section 14
During CIRP under IBC:
All suits and recovery actions stop
No asset transfer allowed
Security enforcement is barred
Consequently, the corporate debtor receives breathing space.
Rights of Creditors in CIRP Under IBC
Financial creditors: Full voting rights
Operational creditors: Limited participation
Secured creditors: Priority in liquidation waterfall
Therefore, financial creditors largely control outcomes.
Strategic Considerations:
Financial creditors should prefer Section 7
Operational creditors must avoid disputes
Corporate debtors should act early
Personal guarantors must negotiate proactively
Accordingly, strategic timing determines success.
Why Choose Anirudh Associates for CIRP Under IBC?
Anirudh Associates provides end-to-end CIRP representation, including:
Section 7 and Section 9 filings
Defence against wrongful insolvency petitions
Resolution plan advisory
NCLT and NCLAT representation
Moreover, the firm consistently achieves strong recovery outcomes.
Conclusion
CIRP under IBC remains India’s most powerful insolvency resolution mechanism.
When initiated correctly and pursued strategically, it enables revival, protects value, and maximises recovery.
Therefore, stakeholders must understand initiation routes, evidentiary standards, and post-admission processes to secure optimal outcomes
