Introduced under the Insolvency and Bankruptcy Code, 2016, this framework has transformed debt recovery and corporate restructuring in India.
The IBC insolvency procedure India aims to balance the interests of creditors and corporate debtors while maximizing asset value. Understanding the NCLT insolvency process India is essential for companies, financial institutions, and investors.
What is Corporate Insolvency Resolution Process India?
The Corporate Insolvency Resolution Process India is a time-bound legal procedure initiated when a company defaults on repayment of debt above the prescribed threshold. The objective is either to revive the company through restructuring or proceed with liquidation if revival is not feasible.
The insolvency and bankruptcy code 2016 India introduced strict timelines to prevent prolonged litigation and value erosion.
Who Can Initiate CIRP?
Under the IBC insolvency procedure India, the following parties may initiate insolvency proceedings:
• Financial creditors (banks, NBFCs)
• Operational creditors (vendors, suppliers)
• The corporate debtor itself
An application is filed before the National Company Law Tribunal, which has jurisdiction over corporate insolvency matters.
NCLT Insolvency Process India – Step-by-Step
1. Filing of Application
A creditor files a petition before NCLT along with proof of default.
2. Admission or Rejection
If satisfied, NCLT admits the application and declares a moratorium.
3. Moratorium Period
During the moratorium:
• No legal proceedings can continue
• No asset transfers are allowed
• Creditors cannot enforce recovery
This protects the company during restructuring.
4. Appointment of Interim Resolution Professional (IRP)
An IRP takes control of the company’s management and collects claims from creditors.
5. Committee of Creditors (CoC)
The Committee of Creditors evaluates resolution plans submitted by potential investors.
6. Approval of Resolution Plan
If approved by the required voting percentage and NCLT, the plan becomes binding.
If no viable plan emerges within prescribed timelines, the company liquidation process India begins.
Time Limit Under Insolvency and Bankruptcy Code 2016 India
The Corporate Insolvency Resolution Process India is designed to be completed within 180 days, extendable by 90 days in certain cases. Delays may reduce asset value and impact creditor rights in insolvency India.
Creditor Rights in Insolvency India
Creditor rights in insolvency India are prioritized under a structured payment waterfall mechanism during liquidation. Secured creditors generally receive priority over unsecured creditors.
Operational creditors and employees also have defined rights under the insolvency and bankruptcy code 2016 India.
Company Liquidation Process India
If resolution fails, liquidation is ordered. The liquidator:
• Sells company assets
• Verifies claims
• Distributes proceeds as per priority
• Dissolves the company
The company liquidation process India ensures fair distribution among stakeholders.
Impact on Directors and Management
Once CIRP is initiated, directors lose management control. The resolution professional assumes operational authority during the NCLT insolvency process India.
Conclusion
The Corporate Insolvency Resolution Process India has significantly strengthened India’s financial ecosystem by providing a transparent and time-bound mechanism for resolving corporate distress. Through the IBC insolvency procedure India and structured NCLT insolvency process India, creditors’ interests are protected while giving companies an opportunity for revival. Where revival is impossible, the company liquidation process India ensures orderly closure under the insolvency and bankruptcy code 2016 India.