Insolvency and bankruptcy code, 2016

Our firm supports businesses, creditors, and stakeholders within the intricate Insolvency and Bankruptcy Code (IBC) framework. Our dedicated legal experts are apt at finding opportunities and managing challenges under the IBC, offering a spectrum of services that drive financial recovery and corporate rejuvenation.

Our firm has extensive expertise in the Corporate Insolvency Resolution Process (CIRP) and representation, offering adept guidance to creditors and corporate debtors. We advise our clients throughout the insolvency process, starting from the pre-insolvency stage or during the corporate insolvency resolution process (advising the committee of creditors or the resolution professional), to acquisition of the stressed asset via an insolvency process. 

We conduct comprehensive legal and due diligence, enabling clients to make informed decisions on acquisitions, investments, and restructuring. We can also assist our clients in designing and implementing effective restructuring and turnaround strategies while also providing transaction advisory services, protection of creditors’ rights, and expert representation in IBC-related litigation. 

For corporate entities seeking a smooth exit strategy, we provide guidance on voluntary liquidation processes and assist clients in adhering to statutory requirements, managing creditor interests, and efficiently winding down operations legally and cost-effectively.

We offer legal representation to Resolution Professionals (RP) to ensure the clients comply with legal proceedings and safeguard the interests of all stakeholders involved. Further, we offer seasoned professionals who can act on behalf of RPs. 

We assist creditors in preparing and submitting proof of claims, helping them secure their rightful share of assets in the resolution process.

We are committed to delivering strategic advisory services that empower our clients to confidently navigate the complexities of the IBC landscape, ensuring they seize every opportunity for growth while adhering to evolving legal requirements.


The IBC is a comprehensive legislation that provides a unified framework for the resolution of insolvency and bankruptcy cases in India. It aims to consolidate and amend the laws related to insolvency resolution of corporate entities, individuals, and partnerships.

The monetary threshold for applying to initiate CIRP under the provisions of IBC is Rs. 1 Crore.

CIRP is a legal process initiated by any creditor (Banks/NBFCs or Creditors who have provided goods and services) or a company itself for the resolution of insolvency and distress in a corporate entity. It involves the appointment of an insolvency professional, formulating a resolution plan, and possibly restructuring the company to ensure its viability.

Initiating the Insolvency and Bankruptcy Code involves applying for a Corporate Insolvency Resolution Process against a debtor. Our experienced team assists clients in filing the necessary applications. It guides them through the process of restructuring or liquidation of insolvent companies.

CIRP can be initiated by:

– A financial creditor, i.e., a person who has loaned money for interest. 

– An operational creditor, i.e., a person who has provided goods or services.

– The corporate debtor itself, i.e., the company can declare itself bankrupt. 

The primary objective of CIRP is to resolve insolvency, protect the interests of creditors, and ensure that the company continues as a going concern. It aims to strike a balance between reviving the company and maximizing the value of its assets.

The Insolvency Professional (IP) is appointed to manage the affairs of the corporate debtor during the CIRP. The IP takes over the board of directors’ powers, conducts the company’s day-to-day operations, and invites and evaluates resolution plans from prospective resolution applicants.

A Proof of Claim is a formal submission by a creditor, including financial and operational creditors, to the Insolvency Professional (IP) appointed for the CIRP. It outlines the details of the debt owed by the corporate debtor and provides evidence to support the claim amount. The Proof of Claim serves as the basis for determining the creditor’s eligibility to participate in the CIRP and to receive distributions from the proceeds of the resolution plan or liquidation. The proof of claim is verified and admitted by the RP.

A resolution plan is a proposal submitted by a Resolution Applicant (‘buyer’) detailing how they intend to revive and manage the affairs of the debtor company. The plan must demonstrate the viability of the business, propose ways to address the default and ensure the interests of all stakeholders.

A Resolution Applicant refers to an individual or entity that submits a proposal to the Committee of Creditors (CoC) for the resolution of a distressed company undergoing the Corporate Insolvency Resolution Process (CIRP). The proposal, known as a resolution plan, outlines the measures and strategies the Resolution Applicant intends to undertake to revive the company’s financial health and operations. The plan includes details such as the proposed restructuring, changes in management, infusion of funds, and how the interests of all stakeholders, including creditors and shareholders, will be addressed.  

The process of submitting a resolution plan begins with the issuance of an invitation by the resolution professional to potential Resolution Applicants. Interested parties can then submit their resolution plans within the specified timeline. The resolution plan should include details of the Resolution Applicant’s proposed revival strategy, financial arrangement, and treatment of various stakeholders. The resolution professional evaluates the submitted plans and presents them to the Committee of Creditors (CoC) for consideration. 

Yes, a Resolution Applicant can modify its resolution plan before the National Company Law Tribunal (NCLT) grants final approval. However, any modifications must be made within the specified timelines and should not adversely impact stakeholders’ interests. Additionally, a Resolution Applicant has the right to withdraw its resolution plan before the CoC’s approval. However, suppose a plan is withdrawn after the CoC’s approval but before NCLT approval. In that case, the Resolution Applicant may be subjected to penalties or restrictions as per the provisions of the IBC. Withdrawal is generally discouraged and may affect the credibility of the Resolution Applicant in future insolvency proceedings.

The resolution plan is approved by the Committee of Creditors (CoC), which consists of financial creditors. The plan requires approval from at least 66% of the voting share of the CoC. Once approved, the plan is submitted to the National Company Law Tribunal (NCLT) for final approval.

The company may opt for liquidation if a resolution plan is not approved. The liquidation process involves the sale of the company’s assets, and the proceeds are distributed to the creditors in a prescribed manner.

The CIRP must be completed within 180 days, extendable by 90 days in certain cases. The company may initiate liquidation if a resolution plan is not approved within this period. The insolvency resolution process must be completed within 330 days from the insolvency commencement date, including any extensions granted. Timely resolution is a key objective of the IBC.

Third parties, such as suppliers, customers, employees, and other stakeholders, can be indirectly affected by the CIRP. The CIRP focuses on the financial restructuring and revival of the distressed company, and decisions made during this process can impact the interests of third parties. For example, the continuation of supply contracts, employment contracts, and ongoing business relationships may be reviewed and potentially altered to ensure the company’s viability. However, the IBC emphasizes protecting the interests of all stakeholders, and their rights and claims are considered during the resolution process.

During the CIRP, contracts with third parties, such as suppliers, customers, or service providers, cannot be terminated solely due to the commencement of the insolvency process. The IBC prevents parties from ceasing or discontinuing the supply of goods, services, or any other obligations solely on the grounds of the company’s insolvency. However, suppose the resolution professional determines that the ongoing performance of a contract is not beneficial to the resolution process. In that case, they may seek the approval of the Committee of Creditors (CoC) to terminate or modify the contract.

The resolution professional typically assesses ongoing projects, services, or contracts involving the distressed company. The resolution professional works to maintain the continuity of essential services and operations to preserve the company’s value. The resolution professional may seek the CoC’s approval to continue the project if a project or service is deemed essential for the company’s revival. Alternatively, corporates may terminate or modify after obtaining the CoC’s approval if the project or service is not viable or essential.

The IBC places significant emphasis on protecting the rights of employees. Outstanding dues to employees, including salaries, wages, and other benefits, are treated as operational debt and are accorded priority during the distribution of proceeds from the resolution plan. The resolution plan is required to provide for the payment of employee dues and safeguard their interests. Additionally, the resolution professional must ensure that the company’s operations continue smoothly and that employees’ rights are not compromised during the resolution process.

The resolution plan prepared by a Resolution Applicant under the IBC must provide for the payment of outstanding dues to creditors, including third-party creditors. Claims of third-party creditors, such as suppliers and service providers, are categorized as operational or financial debt based on the nature of the claim. These claims are considered during the approval process of the resolution plan by the Committee of Creditors (CoC). The plan outlines the proposed treatment of third-party creditor claims, including repayment terms, settlement, or modification of contracts, as applicable.

Yes, the corporate debtor’s operations continue during CIRP under the management of the IP. The IP takes necessary steps to ensure the company’s operations are maintained as a going concern.

Voluntary liquidation is a process under the Insolvency and Bankruptcy Code (IBC) that allows a corporate debtor (company) to initiate the winding up of its affairs and distribution of its assets to its creditors in an orderly manner. Unlike the traditional winding-up process, voluntary liquidation is initiated by the corporate debtor itself, with the approval of its shareholders and creditors.

A corporate debtor can initiate voluntary liquidation under the IBC if it is solvent, meaning it is able to pay its debts in full. A special resolution must approve the decision to initiate voluntary liquidation of the company’s shareholders.

Upon passing the special resolution for voluntary liquidation, the corporate debtor must appoint a registered insolvency professional as the liquidator. The liquidator’s role is to oversee the liquidation process, realize the assets of the company, and distribute the proceeds to creditors.

Once the assets are fully liquidated, and the proceeds are distributed to creditors, the corporate debtor is dissolved, and its existence ends. Any remaining surplus, if available, is distributed among the shareholders as per their entitlement.

No, a corporate debtor that cannot pay its debts should initiate the insolvency resolution process (CIRP) under the IBC instead of voluntary liquidation. Voluntary liquidation is only available to solvent corporate debtors.

Voluntary liquidation allows a solvent corporate debtor to initiate a structured winding-up process on its terms under the supervision of a liquidator. It may provide more flexibility and control to the corporate debtor compared to the insolvency resolution process, which creditors typically initiate.

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